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Kaveri Seed Company Limited Q4 and FY 2023-24 Earnings Conference Call Summary
Financial Performance • Q4 Revenues: Increased by 32.82% to Rs. 80.54 crores. • Net Profit: Rose to Rs. 2.79 crores from a loss of Rs. 13.89 crores the previous year. • Full Fiscal Year Revenues: Reached Rs. 1,062.43 crores, a 6.18% increase. • Net Profit for FY: Grew by 9.72% to Rs. 293 crores.
Market Segments • Vegetable Segment: Strong performance with projected 20% year-on-year growth. • Exports: Increased by 250%. • Maize Market Share: Holds 7-8%, ranking among the top five players. • Cotton Market Share: Currently at 12-13%, down from previous highs.
Strategic Initiatives • International Expansion: New subsidiary in Bangladesh. • Share Buyback Program: Initiated to enhance shareholder value. • R&D Investments: Increased from Rs. 45-47 crores in FY '23 to around Rs. 57 crores in FY '24.
Market Dynamics • Cotton Pricing: Anticipated 4-5% volume decline due to production shortages. • Government Initiatives: Expected to benefit maize demand and stabilize prices. • Non-Cotton Segments: Account for 70% of sales, expected to maintain EBITDA margins despite rising production costs.
Customer Insights • Packets Sold in 2024: Approximately 51 to 52 lakh. • Customer Advances: Reported between Rs. 160 crores to Rs. 180 crores, down from Rs. 270 crores the previous year.
Capital Expenditure • Total Expenditure: Rs. 208 crores primarily for new offices and plant setups. • Cold Storage: Already operational.
Future Outlook • New Technologies: Expected approvals within six months to enhance cotton yield. • Positive Outlook for Non-Cotton Crops: Many genetically modified crops under trial with potential approvals on the horizon.
Kaveri Seed Company Limited Q3 and FY 2023-24 Earnings Call Summary
Financial Performance • Revenue Growth: • 4.46% increase in revenue from operations to Rs. 981.89 crore. • 3.3% rise in net profit to Rs. 290.22 crore. • Q3 revenue down by 4% at Rs. 118.47 crore; EBITDA at Rs. 222.25 crore. • Sales Highlights: • Strong growth in maize and vegetable seed sales. • 139% increase in export revenue.
Long-term Growth Guidance • Growth Projections: • Long-term profit growth guidance of 12% to 15%. • Target of Rs. 2,000 crore in revenue by FY 2030, with 70% from non-cotton crops.
Market Insights • Market Share: • 14-15% market share in cotton seeds; aiming to regain share in pearl millet (2-3%). • Current market shares: 8-9% for maize, 10-11% for hybrid rice, and 10-12% for selection rice. • Competitors: • RASI identified as a key competitor in the cotton market.
R&D and Investments • Increased Investments: • Significant rise in R&D and personnel costs, now close to 200 employees. • R&D expenses expected to rise from 5% to 8-9% of sales. • Product Development: • Plans to launch 12 to 15 new hybrid products annually.
Crop Focus and Challenges • Key Crops: • Focus on cotton, maize, rice, and vegetables, accounting for 80-85% of R&D spending. • Anticipated 30% to 40% decrease in cotton seed production this Kharif season. • Export Potential: • Projected export revenues could exceed Rs. 100 crore in the next three to four years.
Market Trends • Seed Replacement Ratios: • Hybrids require 100% seed replacement; traditional varieties vary. • Hybrid penetration: 8-10% in rice, 75-80% in maize.
Concerns and Future Outlook • Production Risks: • Potential 5% to 10% decrease in cotton production due to disasters and pricing uncertainties. • Growth Strategy: • Emphasis on value growth over volume growth, with margins of 30% to 40% expected. • Optimism for Future: • Confidence in diversified crop portfolio and increased R&D investments driving future growth.
Kaveri Seed Company Limited Q1 FY 2023-24 Earnings Conference Call Summary
Financial Performance • Net Profit: Exceeded total profit of previous fiscal year. • Earnings Per Share (EPS): Increased by 15.6% to INR 49.10. • Consolidated Revenue: Grew by 7.37% to INR 736.1 crores. • Net Profit: Increased by 12.68% to INR 275.62 crores.
Challenges and Growth Projections • Maize Sales: Affected by delayed monsoon; growth anticipated in Rabi season. • Vegetable Seeds Business: Projected growth rate of 25-30% annually over the next three years. • Tax Demand Appeals: No updates available.
Competitor Insights • Vegetable Seed Growth: Competitors experiencing faster growth; need for brand trust among farmers. • Key Crops: Okra, chili, and tomato account for over 50% of revenue but faced recent challenges.
Cotton Seed Market • Revenue Growth: 8-9% despite flat volumes due to better pricing and seed shortages. • Illegal Seed Penetration: Stable levels; no loss in market share reported.
Maize Revenue • Revenue Decline: Clarified as 8-10% year-over-year; 25% decrease in volumes due to non-participation in subsidy programs. • Recovery Anticipated: Expected later in the year.
Export Projections • Export Revenue Increase: Projected to rise from 2% to 3-3.5% in FY '24. • Future Export Revenues: Anticipated INR 200-300 crores in 4-5 years, especially in maize and rice markets in Southeast Asia.
Vegetable Division Focus • Profitability: All vegetable segments profitable with EBITDA margins of 30-60%. • Growth Rate: Vegetable division growing at 15-20% annually. • GM Crops Development: Ongoing partnership with Monsanto; government approvals expected soon.
Long-term Outlook • Sustained Growth: Confidence in growth over the next 3-5 years due to diversified crop portfolio and investments in research and infrastructure.
Kaveri Seed Company Limited Q4 and FY 2022-23 Earnings Conference Call Summary
Financial Performance • Revenue Growth: Increased by 9.35% to INR 1000.56 crore. • Net Profit Growth: Rose by 27.83% to INR 267.04 crore. • EBITDA Margin: Improved to 29.68%.
Key Growth Areas • Crops: Significant growth in Cotton, Maize, and Bajra. • New Hybrids: Contributed to higher volumes and margins.
Future Projections • Revenue Growth: Expected 10-12% increase in FY 2024. • Net Profit Growth: Anticipated rise of 15-20%.
Cotton Seed Pricing • Price Increase: BG-II cotton seeds priced at INR 853, up from INR 800. • Market Challenges: Competition and dealer discounts affecting price realization.
Market Expansion • New Subsidiary: Establishing a presence in Bangladesh. • Focus on Hybrids: Competing primarily in hybrid varieties against National Seed Corporation.
Industry Concerns • Agri-Aggregators: High barriers to entry in the seed market. • GM Crops: Not currently involved but open to licensing technology.
Export Growth • Revenue Contribution: Increased from 1.4% to nearly 2%. • Optimism for Future: Positive outlook on export growth.
Revenue Diversification • Non-Cotton Revenue: Increased from 42% in FY '19 to 62% currently. • Balanced Growth: Projected 30-70 cotton to non-cotton revenue ratio.
Crop Performance Outlook • Rice Market: Confidence in outperforming despite challenges. • Cotton Sales Growth: Modest 5-10% growth expected.
Financial Strategy • Cash Utilization: History of dividends and recent buybacks. • Cash Reserves: Ranged from INR 300 crore to INR 500 crore. • Future Investments: Open to strategic investments or acquisitions.
Illegal Cotton Seeds • Awareness and Enforcement: Improved awareness and government enforcement may reduce prevalence.
Conclusion • Overall Sentiment: Optimism for long-term growth despite past stagnation.
Kaveri Seed Company Limited Q3 FY2023 Earnings Conference Call Summary
Financial Performance • Q3 revenue increased by 20.97% to Rs. 123.49 Crore. • Net profit surged by 313.24% to Rs. 37.54 Crore. • Significant growth in hybrid rice and maize segments. • Successful buyback of nearly 2.4 million shares. • Improved EBITDA margins indicating operational efficiency.
Future Growth Outlook • Management optimistic about growth driven by government support and R&D. • Projected 15% to 20% year-on-year growth in EBITDA. • Potential for increased revenue from the vegetable segment.
Margin Sustainability • Historical margins between 28% to 30% expected to be sustainable. • Diversification into non-cotton crops like rice and maize.
Questions from Participants • Volume Growth: Positive overall growth in non-cotton segments, specific numbers not available. • Vegetable Seed Business: Confidence in meeting Q4 revenue targets despite previous shortfall. • Other Income: Increase influenced by investment timing and buyback; expected year-end total of Rs. 40-50 Crores. • Outstanding Receivables: Minor recoveries noted, no significant provisions for the quarter. • Government Approvals: Anticipation of approvals for genetically modified crops.
Company Plans and Operations • No current plans for expansion into fruit seeds and hydroponics. • Sufficient cash reserves; no additional funding required. • CSR funds allocated for education and rural development. • Annual capex estimated at Rs. 25-30 Crores for R&D and processing.
Additional Inquiries • Website update suggested to reflect expanded product range. • Preparedness for gene editing technology (CRISPR) acknowledged; exploring collaborations. • Optimism about export growth to neighboring countries, Southeast Asia, and Africa.
Conclusion • The call concluded with gratitude to participants and contact information for further inquiries.