About 55% of India’s population relies on the agriculture industry as their main means of subsistence. Amid this extensive domain, Kaveri Seed Company has emerged as a standout performer. As a pioneer in the Indian seed industry, Kaveri Seed Company has consistently prioritised the provision of superior-quality seeds, addressing the varied requirements of Indian farmers.
The company’s recent disclosure of its Q4 results has sparked a flurry of conversation and analysis among investors and market observers. This article aims to delve deep into these results, dissecting the numbers, and understanding their implications.
Also read: The past, present, and future of the Indian agriculture industry
About Kaveri Seed Company Ltd
Kaveri Seeds is a shining symbol of India’s agricultural advancement. Founded in 1976 by Mr G V Bhaskar Rao, the company was conceived with the ambition to fuel India’s Green Revolution. Today, it is recognised as the country’s premier agricultural firm, specialising in Hybrid Seeds for crucial Indian crops.
The Company boasts a varied and extensive selection of products that cover a wide array of crops, including cotton, corn, rice, vegetables, and several field crops. This all-encompassing assortment allows the company to meet the needs of a diverse customer base effectively, while also reducing the risks linked to depending exclusively on a single crop or market segment.
By providing such a broad range of products, the company strategically situates itself to serve a plethora of agricultural demands and promote enduring growth. In terms of market share, Kaveri Seed Company Ltd has carved out a significant presence for itself. The company holds an impressive 15% of the cotton market. Likewise, Kaveri Seeds’ market share in the maize market is noteworthy, standing at 10%.
The journey of Kaveri Seeds is characterised by its steadfast commitment to the agricultural community. With over 100,000 production growers and an expansive 65,000 acres of land spanning 12 distinct agro-climatic zones, the company boasts a varied portfolio of seeds.
These seeds are designed to cater to the needs of diverse agro-climate and soil conditions, unlocking the inherent potential of seeds through innovative concepts and initiatives. This approach has not only propelled Kaveri Seeds’ growth but has also generated substantial value for stakeholders and the nation as a whole.
The company’s vision and mission are clear: to establish Kaveri Seeds as a standard in the seed industry through unwavering performance in research, innovation, and product development. This vision is bolstered by the company’s foundational pillars, which steer its quest to become the best in the industry.
The market capitalisation of Kaveri Seed Company Ltd is ₹4,379.52 crores, as of May 28, 2024.
Kaveri Seed Company Ltd’s quarterly performance
Here are the key financial metrics reflecting the company’s quarterly performance in relation to the previous quarter:
| Q4FY24(₹ crores) | Q3FY24(₹ crores) | Change(%) | |
| Revenue | 98.35 | 142.63 | -31.05 |
| Operating profit | -11.87 | 8.58 | -238.34 |
| Profit before tax | 3.42 | 14.82 | -76.92 |
| Net profit | -0.40 | 11.07 | -103.61 |
| EPS | -0.05 | 2.11 | -102.37 |
The financial comparison between Q4 FY24 and Q3 FY24 reveals a downward trend across all metrics. The company has shifted from an operating profit in Q3 to an operating loss in Q4, and the net profit has also turned negative, indicating a challenging quarter for the company.
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Kaveri Seed Company Ltd’s annual performance
Here are the key financial indicators of the company, side by side with the data from the preceding year:
| FY2024(₹ crores) | FY2023(₹ crores) | Change(%) | |
| Revenue | 1,148 | 1,068 | 7.49 |
| Operating profit | 286 | 252 | 13.49 |
| Profit before tax | 321 | 286 | 12.24 |
| Net profit | 300 | 273 | 9.89 |
| EPS | 58.08 | 48.59 | 19.53 |
In a bid to provide returns to its shareholders, the company undertook a buyback of 44.83 lakh shares, priced at ₹725 per share, totalling an amount of ₹325 crore.
Market reaction
On May 23, 2024, Kaveri Seed Company Ltd released its Q4 results. On that day, Kaveri Seeds shares opened at ₹870.00 and hit a low of ₹844.35, falling by 3.04%. The Kaveri Seeds share price eventually recovered by 2.86%, it closed at ₹868.50 on the same day.
When looking at the Kaveri Seeds share price history for the past 5 years, the stock has given a return of 55.05%.
The anticipated share price target for Kaveri Seeds is fixed at ₹788 (downside of 7.32%). This forecast is the outcome of a comprehensive analysis of diverse financial indicators and prevailing market trends.
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Key operating highlights revealed
Here are the key operational highlights of the company:
- The contribution from new products has seen a significant increase, moving from 54.11% to 63.86% of the total volumes in Bajra.
- Hybrid Rice maintained a steady volume but experienced a revenue growth of 9.65%.
- Selection Rice volumes remained stable, but there was a revenue increase of 10.43%.
- Maize revenue saw a modest growth of 2.79%.
- The contribution from new products in Maize crops saw a substantial increase, moving from 33.87% to 47.96% of the total volumes.
- Vegetable seed sales volumes and revenue saw a considerable growth of 19.79% and 23.69% respectively, compared to the previous fiscal year.
- Specific vegetable crops like Bitter Gourd, Tomato, Okra, and Watermelon performed exceptionally well this year, showing a massive increase of 250% compared to the previous year.
Peer analysis
Let’s compare the key financial ratios of Kaveri Seed Company Ltd with that of its competitors:
| Company | CMP (₹) | Market cap(₹ crores) | P/E | Earnings Yield (%) |
| Kaveri Seed Company | 850.2 | 4,270 | 14.3 | 7.38 |
| Bombay Super Hybrid Seeds | 203 | 2,126 | 95.7 | 1.29 |
| Nath Bio-Genes | 185 | 352 | 9.57 | 12.2 |
| Mangalam Global Enterprise | 21.5 | 354 | 19.0 | 8.67 |
| Upsurge Seeds of Agriculture | 281 | 198 | 27.4 | 4.82 |
Bottomline
Kaveri Seed Company Ltd. continues to uphold its strong position in the Indian seed industry, utilising its broad product range and dedication to quality to cater to the varied requirements of Indian farmers.
Despite facing a tough Q4 FY2024, characterised by a drop in revenue and profitability compared to the previous quarter, the company has shown resilience and strategic planning in its yearly performance. The market response to Kaveri Seed’s Q4 results was varied, with the share price initially experiencing a dip but eventually rebounding by the close of the trading day.
The company’s strategic actions, including the recent share buyback, reflect a commitment to delivering value to shareholders. This, along with its solid market standing and continuous innovation, sets Kaveri Seed Company on a promising path for future growth.
