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The Govt. of India recently imposed a ban on non-basmati rice export. This has resulted in increase in demand for Basmati rice in export markets. The realizations have also increased.
No wonder, major basmati rice listed stocks like LT Foods, Chaman Lal and KRBL have performed well.
Source: Chaman Lal Q1 FY 24 presentation
We recently went through the con-call of KRBL, the company behind the well known India Gate basmati rice brand.
Below, we have shared interesting insights from the Q1 FY 24 con-call of KRBL to understand the current situation and the outlook for the industry. Hope you find the details useful for your own investments or to add the stock to your watch list.
A few days back, we released our new stock recommendation for our Alpha and Alpha + Members.
It’s a sub 3,000 crore market cap, fast growing Specialty chemicals company
The company has introduced new import import substitute products, expanded aggressively over the last 4-5 years, started reducing debt and available at only ~11 times last 5 years average net profit
You can get this new recommendation along with other recommendations, by subscribing HERE
KRBL – Insights from Q1 FY 24 con-call of the company
– General Details
- Basmati production for marketing year 22-23 is around 9.5 million metric tonnes, about 12% higher than last year
- India basmati exports grew 16% in volume terms and 46% in revenue terms in FY’23
- Area under basmati expected to be higher in the new crop 2023 due to good prices realized by the farmer last year
- There’s a a forecast of increase in production by 12% over last year
- Realization are going to increase. You see the market as on date is on fire. In Q2, there will be 5-7% jump in realizations
- In Q1, basmati export realization – 98,000 per MT
- In Q1, domestic basmati realization – 68,500 per MT
– Regulatory change
- The regulations imposed from 1 August 2023 are poised to bring about a significant shift in the basmati rice landscape
- One notable change expected with the implementation of these regulations is the probable preference shift among consumers from loose basmati to packaged ones
Disclaimer: This is not a recommendation to buy/sell any of the stocks mentioned above. The securities quoted are for illustration only and are not recommendatory.
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Whether the research analyst or research entity or his associate or his relative has any financial interest in the subject company/companies and the nature of such financial interest – Yes, in LT Foods and Chaman Lal Setia
Whether the research analyst or research entity or his associates or his relatives have actual/beneficial ownership of 1% or more securities of the subject company (at the end of the month immediately preceding the date of publication of the research report or date of the public appearance) – No
Whether the research analyst or research entity or his associate or his relative has any other material conflict of interest at the time of publication of the research report or at the time of public appearance – No
Whether it or its associates have received any compensation from the subject company in the past twelve months – No
Whether it or its associates have managed or co-managed public offering of securities for the subject company in the past 12 months – No
Whether it or its associates have received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past 12 months – No
Whether it or its associates have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past 12 months – No
Whether the subject company is or was a client during twelve months preceding the date of distribution of the research report and the types of services provided – No
Whether the research analyst has served as an officer, director or employee of the subject company – No
Whether the research analyst or research entity has been engaged in market making activity for the subject company – No