Sell Kaveri Seeds Company; target of Rs 971: LKP Research

LKP Research is bearish on Kaveri Seeds Company has recommended sell rating on the stock with a target price of Rs 971 in its research report dated August 19, 2024.

Broker Research

August 21, 2024 / 10:44 IST

sell

26 Aug, 2025 12:21

Volume

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LKP Research's research report on Kaveri Seeds Companys

Kaveri Seeds Company Limited (KSCL) reported subdued growth in their only best quarter which is Kharif Season, In Q1FY25 KSCL reported Revenue/EBITDA/PAT of ₹8,032/2,952/2,853mn as against ₹7,361/2,778/2752 mn in Q1FY24 grew by 9%/6%/4% YoY. As per management commentary this quarter was expected to be weak due to loss of production and market share in cotton seeds and 37% increase in cost of production on a YoY basis, and the company was unable to pass on the higher cost due to MSP. Cotton segment revenue and volumes declined by 27%/35% respectively during the quarter whereas Non cotton revenues grew 32% YoY led by an 80% YoY rise in revenues of Maize and 27% rise in selection rice variety of Hybrids. KSCL’s Exports revenue continued to perform as it grew 452% led by Africa and South Asia region Rice and Sunflower seeds growing faster in the export markets. KSCL’s EBITDA/Pat margins came in at 36.8%/35.5% in Q1FY25 as against 37.7%/37.4% (-99bps/-188bps) in Q1FY24 respectively (PAT margin higher due to low tax as revenues are treated as agricultural income hence are exempt from taxes).

Outlook

We expect KSCL to post a Revenue/EBITDA/PAT CAGR of 12%/19%/10% respectively over FY23-FY26E. We revise our rating to ‘SELL’ from ‘BUY’ rating for a TP of ₹971.

For all recommendations report, click here