Good set of results from Chaman lal Setia, sales increased by 62% and profits became 2.3x. Its interesting that they are trading at 7.7x PE despite such growth. I am sharing the concall notes below.
FY23Q3 concall notes
- Paddy prices have gone up by Rs. 10 this year
- Have done very well in Germany, Israel and Egypt in 9MFY23
- Have entered newer markets (Kazakhstan, Turkmenistan)
- 6-7% sales from own brand in International markets. Domestic sales is in own brand
- Niche is that they have a very large customer base. Profitability comes from smaller customers and smaller packet sizes (< 10kg) as they pay more
- Most exports are under 10kg packaging
- All exports are sold under ECGC (Export Credit Guarantee Corporation of India). Extend credit only to those customers with whom they have very long term relationship (2-3% of overall business)
- Will not acquire a company from this industry, instead looks for suppliers whose financials are getting weaker to take over their customers
- Don’t do any business in Iran
- Have large businesses in Canada and USA, are FDA certified
- Sales go up during Ramadan period
- Have been participating in a lot of exhibitions to get new business
Disclosure: Invested (position size here, no transactions in last-30 days)