Buy Kaveri Seed Company; target of Rs 450: Anagram Research

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Buy Kaveri Seed Company; target of Rs 450: Anagram Research

Anagram Research is bullish on Kaveri Seed Company and has recommended buy rating on the stock with a target of Rs 450 in its October 27, 2010 research report.

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Anagram Research is bullish on Kaveri Seed Company and has recommended buy rating on the stock with a target of Rs 450 in its October 27, 2010 research report.

"Kaveri Seed Company is one of the prominent hybrid seed players of India with huge product portfolio of more than 45 hybrid verities. The top-line of the company was heavily contributed by Corn and sunflower but after 2007 the company has shifted its focus to the BT cotton seeds and the contribution of BT cotton to the topline is 25% during FY 10 from 10% in FY 07. The market share of the company is just 2% in FY 10 while cotton is contributing more than 25% to the top line. It shows huge potential for the cotton seeds business. It has invested more than Rs 60 crore in recent past. This capex is enough to take top line to Rs 400 crore in years to come from the present Rs 160 crore. The capex includes Strategic green field expansion at Pamulparthi village, warangal Mandal, Medak district with state of art facility for utilizing cob drying, seed processing and cold storage on owned farmland of 29 acres."

"We initiate coverage on Kaveri Seed Company Ltd. which is India's prominent hubrid seed player. We believe that KSCL is ideally positioned to capitalise on the rising demand seen for hybrid seeds like cotton, sunflower and rice. Also with a timely expansion at Pamulparthi village, warangal Mandal, Medak district, the company will get the benefit of increased capacity expansion which will further boost earnings during FY11 and FY12. We rate the stock as a BUY with a target price of Rs 450. At our target price Rs KSCL will be valued at 12 x FY12E," says Anagram Research report.

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