Kaveri Seed Q2 Results Review - Steady Revenue Growth Despite Weak Cotton Seed Revenues: ICICI Securities

ICICI Securities Report

Highlights from Kaveri Seed Company Ltd.'s Q2 FY23:

1. non-cotton portfolio i.e. hybrid rice seeds, maize seeds, and vegetable seeds reported -94.7%, 10%, and 358% YoY revenue growth in Q2 FY23, respectively,

2. cotton business reported revenue steep decline of 34.2% in Q2 FY23 largely due to volume decline of 38%. We believe lower acreage and higher sales in Q1 FY23 impacted off-take in Q2 FY23 and

3. Kaveri Seed continues to increase the contribution from new product sales.

It has announced buy-back of Rs 1.25 billion (fifth consecutive buy-back in past five years) at maximum price of Rs 700/share.

We cut our FY23-24 earnings estimates to factor in Q2 FY23 results. We model Kaveri Seed to report revenue and profit after tax compound annual growth rate of 12.4% and 25.3%, respectively, over FY22-24E.

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