Kaveri Seed Company Ltd. share price target

Sector: Agri-Input /Small-Cap | Earnings Update 1QFY19 Background: Kaveri Seeds is the largest producer of hybrid cotton seeds in India with a market share of ~15%. Kaveri Seeds has access to 60,000 acres under seed production, with farms in Karnataka, Andhra Pradesh and across the country. In the last five years (FY13-18), company's standalone revenue and PAT have grown at a CAGR of 1.6% and 10.4% respectively. The company has a pan-India presence with a strong distribution network of ~15,000 distributors (direct & in-direct) and retailers across 15 key states in India (up from 11,000 - 4 years ago). Kaveri has 26 warehouses at strategic location with a combined storage space of ~600,000 sqft. The company has a marketing team of ~200 professionals....

KSCLs revenue grew 3.4% YoY to INR416m (est. Margin came in at -32.1% (est. of -3.3%), as against -67.5% in the year-ago period. of INR- 26m) v/s INR-306m in 4QFY17. of INR- 26m) v/s INR-306m in 4QFY17. For FY18, consolidated revenue grew 16% YoY to INR8,192m, margin expanded 730bp to 27.1% and EBITDA grew 59% YoY to INR2,218m.

significantly lower inventory write-offs. Consequently, adj. PAT increased 191.7% YoY to INR209m (est. of INR73m). Increased focus on expanding geographical presence bears fruit: The company's focus on strengthening its distribution network in the northern, eastern and western markets has started to show results, with growth of over 50% in Bihar and Orissa, >100% in Jharkhand, >200% in West Bengal, and >50% in Maharashtra and Gujarat. The company is expected to further expand its network by improving penetration via new products launches,...

Kaveri Seed (KSCL) is highly dependent on the Cotton business, which contributes ~60% of its overall revenues. However, of late, management has increasingly shifted its focus toward the higher-margin Non-cotton business (target to take its share to 50% of overall revenues over FY18-20), especially the less-penetrated Vegetables segment. Vegetables business is poised for strong growth of ~200%, with revenues expected to increase from INR60m in FY17 to ~INR180m in FY18 (much of this growth is likely to materialize in 2HFY18). The company plans to introduce...

enrichment and crop protection areas in India. It offers its products in two categories field crops and vegetables. Its range of field crops includes corn, paddy, cotton, sunflower, mustard sorghum, pulses, bajra and wheat. Its range of vegetables includes tomatoes, okra, chilies, watermelon, gourds and brinjal. Presently, KSCL owns over 600 acres of farm land and has a large...

largest producer of hybrid cotton seeds in India with a market share of ~17%. Kaveri Seeds has access to 60,000 acres under seed production, with farms in Karnataka, Andhra Pradesh and across the country. In the last five years (FY10-15), company's revenue and PAT have grown at a CAGR of 48% and 59.6% respectively. The company has a pan-India presence with a strong distribution network of ~15,000 distributors (direct & in-direct) and retailers across 15 key states in India (up from 11,000 - 4 years ago). Kaveri has 26 warehouses at strategic location with a combined storage space of ~500,000 sqft. The company has...

largest producer of hybrid cotton seeds in India with a market share of ~17%. Kaveri Seeds has access to 60,000 acres under seed production, with farms in Karnataka, Andhra Pradesh and across the country. In the last five years (FY10-15), company's revenue and PAT have grown at a CAGR of 48% and 59.6% respectively. The company has a pan-India presence with a strong distribution network of ~15,000 distributors (direct & in-direct) and retailers across 15 key states in India (up from 11,000 - 4 years ago). Kaveri has 26 warehouses at strategic location with a combined storage space of ~500,000 sqft. The company has...

Kaveri Seed Company's (KSCL) revenues fell 8.4% from INR5,394m in 1QFY16 to INR4,940m in 1QFY17 (est. of INR7,305m not adjusted for Ind-AS). EBITDA too declined to INR1,583m (est. of INR2,369m) from INR2,256m in 1QFY16, while margins came in at 32% (est. of 32.4%) v/s 41.8% in the year-ago period. Adjusted PAT fell to INR1,544m (est. of INR2,254m) from INR2,191m in 1QFY16. For 1QFY17, cotton seed volumes declined 15% YoY to 5.2m packets, rice seed volumes remained flattish YoY at 6.18mt, while maize seed volumes increased 50% YoY to 6.6mt....

seed production, with farms in Karnataka, Andhra Pradesh and across the country. In the last five years (FY10-15), company's revenue and PAT have grown at a CAGR of 48% and 59.6% respectively. The company has a pan-India presence with a strong distribution network of ~25,000 distributors (direct & in-direct) and retailers across15 key states in India (up from 11,000 - 4 years ago). Kaveri has 26 warehouses at strategic location with a combined storage space of ~500,000 sqft. The...

Management Discussion: 1) Cottons seed packets to sell ~7mn in FY17, 2) expects revenue growth of 20-25% if monsoon supports, 3) the management expects good growth in non-cotton product portfolio especially in maize, 4)...