Kaveri Seed Q3 Results Review - Market Share Gains With Success Of New Products: ICICI Securities

ICICI Securities Report

While Oct-Dec is a seasonally weak quarter, Kaveri Seed Company Ltd. has reported strong performance with revenue and Ebitda growth of 14.2% and 79% led by 117.1% growth in sales of hybrid rice seeds YoY.

Cotton seeds also reported healthy growth of 6.2% YoY. We note the new products are doing well and are leading to market share gains. With market leading position in cotton seeds and established competitive advantages, the company continues to generate strong free cash flows (Average FCF/profit after tax over FY13-22: 68%).

We note Kaveri Seed has done fifth buyback in past six years. It has done buyback of 2.39 million shares at aggregate sum of Rs 1.3 billion in nine months-FY23. 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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