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Last Updated : May 12, 2016 04:31 PM IST | Source: CNBC-TV18

See 40% upside in Chaman Lal Setia: Prakash Diwan

According to Prakash Diwan of prakashdiwan.in, one can see 40 perccent upside in Chaman Lal Setia.

Prakash Diwan of prakashdiwan.in told CNBC-TV18, "Chaman Lal Setia is a Basmati rice exporter, it has been around for a long time. They sell their brand under the Maharani brand name and it is extremely popular and well accepted in markets like the UK, the Gulf and is always regarded locally there as a premium product as compared to a lot of the other ones like Daawat and Kohinoor and all. So, this is what got us interested, if these are sitting on good margins, it is a good story. It is a very well run, family run company. Now the second generation of three brothers have taken the business forward from the parents and that is also heartening because it is actually doing much better. The other thing I liked about this business was, last year you had a little bit of a glut of sorts for Basmati and this time the sowing has been much lower. There are estimates that globally there will be a 30 percent reduction in inventories by the time we reach September-October. That means the pricing power that these companies would get is phenomenal."

"Chaman Lal Setia doesn't really sell much in the domestic market as yet but there is likelihood of them tying up with Reliance Retail and Big Bazaar and all to get some of their lower end brands to come into the Indian market and that will be better utilisation and lower logistics cost. So, it is a good story," he said.

"You have an EPS expectation of about Rs 11-12 for this year. Last year they were around Rs 8.5. So, at the current market price it has not even discounted at half the rate as what KRBL or LT Foods. So, you have probably an undiscovered stock with a good story. I see a good 40 percent upside in the next 6-12 months,' he added.

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First Published on May 12, 2016 04:15 pm
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