Decline in rice production will result in higher prices of rice. Infact because of the above news, rice prices have already increased by 30% in the last few months. This generally reduces margins of krbl. But the management on conference call yesterday mentioned that price of rice in international market is very high so they will Infact be able to maintain the margins. They will also increase the sales by 600 cr (in fy23) due to new dealer they arranged in Saudi.
The commentary is bullish and I believe they are correct in their forecast. But the market is not appreciative of the stock price. Can’t say exactly why, but I guess probably because no body wants to take even a remote chance of India banning export of rice due to global food situation.
- Jatin
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