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Kaveri Seed Company Ltd (KSCL) reported subdued performance amid Non-kharif season and between a subdued Rabi season as its Revenue de-grew by 1% YoY to ?1,426 mn vs ?1,440 in the year-ago quarter. On a sequential basis its Revenue was down 17% due to non-seasonal sales. However, revenues in its Non-cotton segment saw an uptick as Hybrid rice, Selection rice and Maize revenues went up by 9.3%/8.2%/5.4% respectively even though volumes remained stable during the quarter owing to contribution of new hybrids. Vegetables segment continues to grow at a rapid pace even in the Rabi season. Vegetables sales volumes rose by 22% and revenues increased by 24% vegetable crops like Bitter Gourd, Tomato, Okra & Watermelon continued to outperform other Non-cotton crops in the company’s portfolio

Overall, in 9MFY24 its Revenue/EBITDA/PAT stood at ?10,500mn/3,211mn/2,902mn higher by 5%/6%/4% YoY respectively. In the last few years the company has started to invest heavily on its R&D which currently stands at 5-6% of their overall revenues and as per the management is expected to go up till 7-8% over the next few years contributing to introduction of new hybrids across its non-cotton portfolio. Additionally the company’s employee cost during the quarter jumped 27% YoY which currently stands at the highest level as the company continues its hiring across R&D, Distribution side as it plans to introduce new hybrids. The company is also focusing to grow in the exports markets which currently stands at 2% of its overall revenues and the management is expecting it to contribute 5% of their overall revenues in next five years.

Strong Management Commentary & Guidance

The company is expecting to double its revenues in the next five years from ?1.1bn to ~?2bn by FY30 owing to introduction of new hybrids in Non-cotton portfolio mainly in crops like Rice, Maize and Vegetables. Additionally increased spending on its R&D, Employee cost and R&D Infrastructure will contribute to its growth going forward as the company continues to stay bullish on a long term basis in becoming a pure play seed company in India. Along the way, introduction of new genetically modified seeds in Mustard/Rice by the government will further aid its growth in the coming years. The management reiterated their guidance of growing its Revenues at 10-12% range over the long-term.

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SEBI Registration number is INM000002483