Rice stocks trade higher: Kohinoor Foods, KRBL, Chaman Lal surge

Shares of rice companies surged up to 9.5 per cent in early trade on Tuesday.

Kohinoor Foods was trading 7.93 per cent higher at Rs 81 around 9.50 am (IST). Shares of the company opened at Rs 78.50 and touched a high and low of Rs 82.20 and Rs 77.60, respectively, in trade so far.

Chaman Lal Setia Exports was up 4.56 per cent at Rs 100.95 around the same time, while LT Foods and KRBL were trading higher by 3.77 per cent and 1.34 per cent, respectively, in the morning deals.

For the quarter ended December 31, 2016, Kohinoor Foods and KRBL reported 27.59 per cent and 175.16 per cent year-on-year rise in net profit at Rs 6.66 crore and Rs 110.75 crore, respectively. LT Foods registered 76.57 per cent year-on-year increase in bottomline figures at Rs 29.77 crore. However, net profit of Chaman Lal Setia declined 0.74 per cent year-on-year to Rs 10.84 crore during the quarter under review.

The domestic basmati rice market is estimated at Rs 12,000-15,000 crore. India’s rice industry has seen a transformation in the last decade, with growth of branded business in the Indian market and a strong impetus to exports. Over the last four years, the industry has shown strong revenue growth, with an increasing focus on branded business, according to CRISIL Research, Euromonitor and Ministry of Agriculture.

According to a report by HDFC Securities, branded basmati is still only 26 per cent of total basmati sold in India, highlighting the opportunity for large players to gain share. Consumers are gradually switching towards branded basmati rice as they become more quality and health conscious. With regards to consumption, the share of basmati as a percentage of total rice consumption is still extremely low in India at around 2 per cent as compared to the Middle East (38 per cent).Growth in the domestic basmati consumption would further provide support to basmati rice demand.