ICICI Securities is bullish on Kaveri Seed Company has recommended buy rating on the stock with a target price of Rs 640 in its research report ted Jun 02, 2020.
ICICI Securities research report on Kaveri Seed Company
Three highlights from Kaveri’s Q4FY20 results: (1) Non cotton portfolio of hybrid rice seeds and maize seeds reported 10%+ growth in FY20, (2) Cotton business too performed well with 17% volume growth and (3) There is negligible impact on Kaveri’s business due to coronavirus led disruption as seeds are declared as essentials. We remain positive on Kaveri with the success of non-cotton seeds and its market share gains in cotton seeds in new geographies of Maharashtra and Gujarat. Success of these initiatives will de-risk the current business model centred on cotton seeds in South India.
We note the stock is at an attractive price with its valuation near mean P/E-1 SD, and FCF yield of 9% on FY21E. Maintain BUY with DCF-based TP of Rs640 (implied target P/E 12x FY22E).
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