KRBL - KRBL Ltd. Share Price

Outlook and Major Points from KRBL Management:

Global and Domestic Market Trends:

• Global rice production (534 million metric tons) and consumption (530 million) are rising, improving supply stability.
• India's record rice production (145 million tons; basmati at 16 million tons) led to a 20% paddy price decline. KRBL leveraged this for cost-efficient procurement, with arrivals continuing until February.

Export Strategy:

• Growth Drivers: Removal of basmati export price floor ($950/ton) enhanced competitiveness. Focus on Saudi Arabia (wholesale initially, targeting retail/modern trade) and private label expansion.
• Performance: Q3 export revenue surged 104% YoY to INR 567 Cr. Aim to recover market share lost to Pakistan via branding and pricing.

Domestic Initiatives:

• Market Share: Gained 360 bps in general trade (38.2%), 140 bps in modern trade (42.3%), and 470 bps in e-commerce (42.8%).
• Expansion: Distribution reached 415k outlets (+40k YoY); targeting 70% numeric distribution (1"“1.2 lakh more outlets).
• Innovation: Launched health brand Uplife (edible oils) and ready-to-cook products. Optimizing regional rice portfolio (target: 1 lakh MT in 3 years).

Financials and Margins:

• Revenue: Q3 consolidated revenue hit INR 1,682 Cr (+15% YoY), driven by exports.
• Margins: Gross margin at 24% (core improved to 23.6%); EBITDA margin impacted by freight (2% drag). Expect FY26 margin recovery as lower-cost inventory (post-July 2025) flows through.
• Debt: Net debt reduced to INR 92 Cr (from INR 901 Cr YoY).

Future Outlook:

• Exports: Target INR 500+ Cr from Saudi Arabia in FY26; aged rice inventory (1"“2 years) to support premium pricing.
• Domestic: Double-digit growth via distribution expansion, premiumization, and health category scaling.
• Margins: Anticipate improvement in FY26 with cost normalization, freight rate easing, and operational efficiencies.

Key Risks: Monsoon-dependent crop yields and global price volatility, countered by strategic inventory and diversification.

Major Questions and Answers from KRBL Q3 FY2025 Earnings Call:

1. Question: "Regarding Saudi Arabia market... whether it's through our own channel or we are doing it through distributor or wholesaler? What is the situation of our own office being open there?"
   Answer: Exports to Saudi Arabia are currently through wholesale channels rather than modern trade distributors. KRBL is awaiting permissions to establish its office, expected within 1-2 months. Initial shipments are ongoing and expected to grow steadily.

2. Question: "Are these consignments temporary or supposed to grow in coming quarters?"
   Answer: Saudi exports are not one-time; KRBL anticipates consistent growth in this market, particularly through wholesale channels, with plans to expand distribution.

3. Question: "Gross margins are low historically... Is this due to basmati prices? How do you expect margins to trend?"
   Answer: Lower paddy procurement costs in Q3 led to reduced gross margins, but margins are expected to improve in FY2026 as older high-cost inventory depletes and new lower-cost inventory cycles in.

4. Question: "Why enter edible oils before scaling regional rice to INR 500 crores?"
   Answer: Regional rice portfolio was optimized to focus on high-margin varieties (e.g., Gobindobhog, Sona Masoori). Edible oils under Uplife align with health/wellness trends and leverage KRBL's existing rice bran oil byproducts, targeting INR 300 crores revenue in 3 years.

5. Question: "Inventory valuation impact... any expected losses due to price declines?"
   Answer: No inventory losses anticipated. Paddy prices dropped 10-12% post-November, but KRBL's procurement aligns with market trends, and inventory is valued appropriately.

6. Question: "Export sales breakup (branded vs. private label) and growth drivers?"
   Answer: Growth driven by Saudi market entry, private label expansion, and demand from other regions. Detailed branded/bulk split not disclosed.

7. Question: "Domestic volume trends and margin differentiation across channels?"
   Answer: Branded basmati volumes declined 1% YoY. Modern trade/e-commerce yield higher gross margins but require higher investments. General trade remains more profitable net of costs.

8. Question: "Saudi revenue target and margin profile (wholesale vs. retail)?"
   Answer: Saudi sales (100% India Gate branded) target INR 500+ crores in FY2026. Margins remain healthy due to aged rice premiums, with 55-60% wholesale contribution.

9. Question: "Domestic growth outlook and aging impact on ROCE?"
   Answer: Targeting 50-55% market share via distribution expansion (70% numeric coverage) and loose-to-packaged shift. Aged rice (1-2 years) commands 10-12% pricing premium, supporting ROCE despite lower margins than exports.

10. Question: "Freight cost impact on EBITDA and mitigation?"
    Answer: Freight caused 2% EBITDA margin drag due to higher export volumes, rates, and CIF domestic sales. Rates are expected to normalize, easing pressure ahead.