KAVERI SEED CO LTD (NSE: KSCL) Q2 2025 Earnings Call dated Nov. 14, 2024
Corporate Participants:
Mithun Chand — Executive Director
Analysts:
Unidentified Participant
Guneet Singh — Analyst
Nitin Awasthi — Analyst
Rohan Patel — Analyst
Mohammed Patel — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to the Kaveri Seed Company’s Q2 and H1 FY ’25 Earnings Conference Call.
As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. Joining us today on this call is Mr. Mithun Chand, Executive Director.
Before we begin, I would like to mention that some of the statements made in today’s call may be forward-looking in nature and may involve risks and uncertainties. For a list of such considerations, please refer to the earnings presentation.
I would now like to hand the conference over to Mr. Mitun Chand. Thank you and over to you.
Mithun Chand — Executive Director
Thank you. Good evening and welcome, everyone to our quarter two first-half ’25 earnings conference call. We hope you have had a chance to review the presentation of our results, which is also available on our website. I would touch upon the operational and financial performance of the company and then open the floor for the question-and-answer session.
Our first-half financial highlights, revenue from operations had registered a growth of 3% to INR889.84 crores as compared to INR863 crores first-half of last year. EBITDA was at INR299.68 crore and remained flat as compared to INR298.87 crores in first-half ’24. Net profit was at INR279.41 crores as compared to INR278.55 crores, it remained flat. Our cash on-book stands at INR559 crores as against INR732 crores in the previous half year. For quarter two financial year, revenues from operations was at INR81.676 crores, EBITDA was at INR6.89 crore. Net profit was at INR3.49 crore.
The major highlights. The Board has recommended a 250% dividend, that is INR5 per equity share on a face value of INR2 per equity share. Increase in volumes in hybrid — and selection in maize that resulted in increase in revenues due to good realizations. Non-cotton segment has grown by 24% in the first half of the year on account of major contribution like selection of maize and have done well. The exports during the first half were impacted by unrest in Bangladesh. This has resulted in a muted growth rates at revenue level and further below EBITDA and PAT.
Increase in volumes in both selection and hybridized maize have resulted in good growth rates on account of good realizations. Company’s exports are to recover in the second half of the year during rabi season as the situation in Bangalore is stable now.
Operational highlights, the contribution of new products of — to volumes of bajra was up from 59% to 73%. Hybrid rise volumes increased by 18% and revenues increased by 28%. Selection volumes increased by 20% and revenues by 34%. Maize volumes increased by 9% and revenues by 24%. Vegetable seed volumes increased by 11%, whereas revenue decreased by 13%. Exports sales stand at INR6.1 crore in first half of ’25 as compared to INR25.93 crores in the first half of ’24. The decline is due to the political unrest in Bangladesh.
I will now open the floor for question-and-answer session.
Questions and Answers:
Operator
Thank you. We will now begin the question-and-answer session. [Operator Instructions] We have the first question from the line of Dhruv Saraf from Boehead India. Please go ahead.
Unidentified Participant
Good afternoon, sir. So if I just look at your maize revenue growth in H1 ’25, it is of 24%. And if I were to just knock off Q1 of this year. So what I see in Q2 maize has degrown for the company Y-o-Y to the deal of around 30%, 40%. So what could be the reason, sir, given that other competitors have shown good results in maize and Q2 specifically?
Mithun Chand
Yeah. Our majority of the sales were done in the first quarter itself. Even though it’s in the second quarter, it’s nothing but a spillover of first quarter. So we had a good sale in the first quarter. I don’t know the other companies, they might have done their sale in the second quarter, but it’s all of a half-to-half comparison is a good comparison.
Unidentified Participant
Right. So there could be some front-loading that, which is why Q2 was probably basically.
Mithun Chand
Not exactly front-loading that we take the actual liquidation of the stock, but the areas where we operate, the liquidation might have taken place in the first quarter itself.
Unidentified Participant
All right. That’s helpful. And just to understand the difference between standalone and consolidated numbers for this quarter. So we see that this INR40 crore INR50 crores, INR50 crore difference. Could you just tell us what this difference is on account of?
Mithun Chand
Sorry.
Unidentified Participant
The difference between standalone and consolidated numbers, what explains this difference? I mean, what leads to this difference between standalone and consolidated number of Q2?
Mithun Chand
Just wanted to have the standard consolidator for the Q2, only for the Q2?
Unidentified Participant
Yeah. So I mean, so consolidated for Q2 is at INR137 crores, whereas standalone is INR85 crores. So this difference of INR50 crores that we see, what will account for the difference of INR50 crores?
Mithun Chand
So basically, there are other four subsidiaries in the company, one is Microtek, Genomix, and Aditya Agritech. These are the contribution of some of those companies.
Unidentified Participant
Sure. All right. Thank you.
Operator
Thank you. We have the next question from the line of Guneet Singh from CCIPL. Please go ahead.
Guneet Singh
Hi, sir, I want to understand with the new tax regime, I mean, would we still be able to do buybacks going forward or buybacks are out of questions?
Mithun Chand
It’s a — again, there’s a management decision what we need to take, but we have still no time for the buyback because we have completed the buyback in the last March. So we will decide the later growth of actually.
Guneet Singh
Yeah, I mean, you will decide, but I’m saying that I mean, is it still possible with the new tax regime or is it practically impossible now with the new tax regime? I mean, I want to understand the purposes of management on this. So that’s all that we need to discuss and decide on it’s not an individual decision, it’s a good decision, but we — we see how the shareholders get benefited out of it. We will — most probably in the next quarter or so, we’ll have a clear clarity on it. All right. So currently, you haven’t have a discussion regarding this year.
Mithun Chand
Yes. So we have some more time left for that.
Guneet Singh
All right, sir. Got it. Thank you very much.
Operator
Thank you. [Operator Instructions]. We have the next question from the line of Nitin Awasthi from InCred Equities. Please go ahead.
Nitin Awasthi
Hello, sir. I wanted some volume numbers. If you could shed light on your core four products, how much was the sale and volume terms for the first half of this year?
Mithun Chand
That would be caught in hybrid rights, [Indecipherable] and maize.
Nitin Awasthi
On the overall volumes?
Mithun Chand
Yes, sir. Total volumes just for these four products. So, usually, we are not disclosing volumes as of now, but if you want, I can give the overall company volumes for the first half of last year we had done volumes of INR3.97 lakh. For this year we have done INR4.39 lakh.
Nitin Awasthi
Okay. And what has been the realization in the first half for per packet of cotton?
Mithun Chand
The realization is around close to INR730 odd, INR730, INR748.
Nitin Awasthi
Okay to INR730 odd rupees. Sir, next thing I wish to understand is how much is the maize market expanding by. What is — what was our share and where do we indicate to the growth in the market?
Mithun Chand
As of now, if you compare to last half to this half compared to last year half to this year half, the maize was up by close to 8% to 9%. So as an India level, 8% to 9% level, just it is — it’s in the single-digit number, it’s between 5% and 8%, right, 7% is a total growth rate. But going forward, this year with coming in May, as the ethanol plants are also coming up, the maize stays are good. It’s much formulated for the farmer now. We think going forward maize crop should do well.
Nitin Awasthi
So the market-share bit.
Mithun Chand
Market share of Kaveri?
Nitin Awasthi
Yes.
Mithun Chand
At present, we have market share of around 8% to 9%. Year-on-year, we think that we can grow market share in, especially in maize, we have very good pipeline in hybrids and not only that even it is much visible in the first half, you can see, even though the cotton is down by more than 30% — close to 30% in the first half, we were able to our match our revenues as we have increased the sale in both rice and maize segment. Overall, you can say non-cotton segment. And going forward, we see a very good growth rate coming in for these crops.
Nitin Awasthi
Understood, sir. But the main season for maize where you have the higher sales is normally a crop where in H2, our sales are higher than H1. So this year again and going forward, you expect a similar kind of growth or more growth in H2 for maize?
Mithun Chand
I don’t think so. Usually, H1 contributes to the majority of the maize. Even for last year, the maize was around INR120 crores to INR190 crores.
Nitin Awasthi
Okay, anyway H1 contaminates the majority of the. But in the second half sale maize is the only crop, which contributes more to the revenue. Understood, sir. That’s awesome. Thank you.
Operator
Thank you. We have the next question from the line of Harsh Vora [Phonetic] from DRChoksey. Please go ahead.
Unidentified Participant
Hi, sir. My question is regarding the vegetable segment. If you can just throw some light on the drop in revenue we have witnessed in H1? And are you envisioning the growth of this segment over the next three years? And do you see any export potential in this segment?
Mithun Chand
So you’re talking about export or cotton?
Unidentified Participant
Vegetable seed?
Mithun Chand
Vegetable, if you see our overall first half, there’s a slight decline of 3.5% growth in percentage time when it comes at 12% odd but the season just was delayed this year because of the rainfall and heavy rainfall in most of the parts. We don’t see any threat in vegetable seed. We are pretty confident that we will grow in vegetable as that will be contributed in the second half of the season.
Unidentified Participant
Got it, sir. And any export potential going forward?
Mithun Chand
Last year, if you see the overall exports of around INR65-odd crores, we have done close to INR25-odd crores in Bangladesh itself and other sale in Tanzania of INR27, INR28 crores as if you recall it last year con-call, you said that’s one of the sale because we had done a government sale. But especially in terms of Bangladesh out of this INR24 crores, we might lose INR10 crores to INR12 crores in export because we already lost the season because of the unrest but we are trying to get that sale in some other parts of the world because we are starting other countries like Vietnam, Ivory Coast, we are getting orders from there. So we see that some of the revenue should be covered in those parts. But if you see overall growth of exports are more than one year like this, but overall, if you see good growth in export as well as we are trying to as we are entering into many other new countries and we are getting very encouraging results from those countries, as our subsidaries are really doing well. We — we are pretty confident about export business as well.
Unidentified Participant
Got it. So we are planning to do exports across all products, right?
Mithun Chand
Yes. Especially all products, not cotton, but in maize, rice, and vegetables.
Unidentified Participant
Got it, sir. Thank you so much.
Operator
Thank you. We have the next question from the line of Sanjeev S from JM [Phonetic]. Please go ahead.
Unidentified Participant
Hello.
Operator
Sanjeev, your audio is not very clear. Request to go on the handset mode.
Unidentified Participant
Hello, is it audible now?
Operator
Much better now. Better than the microphone.
Unidentified Participant
Yeah. I just wanted to get a sense of how the government business is panning out. Government business for our company?
Mithun Chand
Yes. So we don’t participate much in the government such as if you see the revenue of the company for this year is hardly some few crores, even I doubt that it’s in a single-digit, not more than that.
Unidentified Participant
Okay. And hello.
Mithun Chand
Yeah.
Unidentified Participant
And any new products that have been launched or perhaps pipeline going forward?
Mithun Chand
That’s a continuous activity what we do. We have launched — we always try new products in each and every crop segment. The launches are where we have launched some hybrids in maize, in cotton, even in rice, and even in other crops as well including bajra and wheat, mustard. So that’s regular activity and there are — apart from these hybrids which are launched, there are many other hybrids which are in the pipeline, which are also — has a good potential in the future years.
Unidentified Participant
So how much would be the share of new products launched in the overall revenue?
Mithun Chand
That depends on the crop to crop. Usually, the hybrid, which is launched in the last three years to five years, you call it a new product. The overall contribution will be in between 20% to 35% in every year in the range of 30% to 34%.
Unidentified Participant
Okay. And what would be the capex for the current fiscal?
Mithun Chand
Most of the capex is already done like we might invest other INR25 crore to INR30 crores for this year and year-on-year INR25 crore to what we always say like INR35 crore to INR40 crores, but INR25 crore INR30 crores should be more than enough.
Unidentified Participant
Okay. And we have substantial investments also and since we have most of the capex we have already undertaken, is there any plan to distribute such cash to investors to maybe hire dividends or buyback?
Mithun Chand
So if you see in the last seven years, eight years, we have done more than six buybacks and every year we are a dividend-paying company and we have just completed our buyback in the month of February-March. So always we try to distribute cash, which is not required for the company. So as earlier, I answered your question like regarding the buyback tax has now changed. We need to have to take a decision on that. I think the — in the next coming quarters, we’ll have a clear clarity on that.
Unidentified Participant
And sir, reservoir levels are like almost 87% in full and.
Mithun Chand
Sorry, which levels?
Unidentified Participant
Reservoir-level.
Mithun Chand
Okay.
Operator
And they’re expecting good demand as well as output in the rainy season. So how should that kind of.
Mithun Chand
More or less rabi for us is a very lean quarter. Second half, usually second half is a very lean quarter when compared to first half. Most of the crops are like wheat and rice, which are all selection rice and some sort of a maize. So, we think it will be in line with last year’s numbers. The vegetable is a very small segment for us, but we see a good growth in vegetables. But overall, if you see second half, it should be in line with last year’s numbers.
Unidentified Participant
Okay. Okay, sir. That’s it from my side.
Operator
Thank you. [Operator Instructions] We have the next question from the line of Anurag Jain, an Individual investor. Please go ahead.
Unidentified Participant
Good evening, sir. My question is, for the half-year balance sheet, the outstanding amount for biological assets is at INR383 crores. This is the highest ever in last four years, five years. So is this indicative of the anticipated growth for next year? Is the company undertaking higher production for the seeds for the seeds for use in next one year?
Mithun Chand
So yes, that’s one-way to look at it. But as I said, the production is pretty high this year and I think we have one of the last largest production what we have taken in the company’s history. As we have — most of the inventories are at almost zero levels, so we are trying to produce more. So that is one of the reason where we see higher production.
And then the other thing is that we see a very good areas coming up, I mean it’s a very good volumes. We are anticipating a good volume for the next coming years in a combination of both the production is more and that same is reflecting the balance sheets.
Unidentified Participant
All right, sir. Thank you.
Operator
Thank you. [Operator Instructions] We have the next question from the line of Dhruv Saraf from Boehead India. Please go ahead.
Unidentified Participant
Sir, we’ve had some challenges in cotton in terms of production over the last year. So, fair to say that these are not behind us and the next cotton season should be good for us in terms of volumes at least.
Mithun Chand
Yeah. The kind of production what we have taken up this year and the current crop years, what we see usually now unless and until something really bad happens with the climate conditions. Otherwise the — we will get the anticipated production and with a good yield. So I don’t see any challenges in the production for the next year, not only in cotton but most of the crops. Right. And I had a question on high-density planting. There have been — I mean, there have been some actions and things had by the textile ministry as well regarding promoting the use of high-density planting practices and cotton. So are you seeing any action happening on the ground or is it just been more work than action? That’s been most of the companies, including is working on high-density planting, but we are yet to get a very suitable library, which uses better yields. But the research is on definitely, as the minister said and the industry is trying for it, definitely down the line the future of cotton seed will be ahead of it’s plantation. The other reason is that even the daily labor is getting — to get daily labor is also getting difficult, farm labor, especially to pick the cotton seed. So it’s a need for the cotton crop to be mechanized. The picking of cotton crop should be mechanized. So that is also one of the reason why the industry will move ahead and say planting.
Unidentified Participant
And you launched the product, I think it’s to 92, was it for high-density planting or is it, I mean, agnostic of that?
Mithun Chand
It’s not exactly for high-identity planting, but if you see that as a crop, it’s slightly high-density, but it’s not like what we have. High density is nothing like that. It is more than double the rate what we saw now. At least double — it is more than that last level.
Unidentified Participant
All right. Thank you so much.
Operator
Thank you. We have the next question from the line of Rohan Patel from Turtle Capital. Please go ahead. Mr. Patel, your audio is not very clear. Request you to kindy drop the speaker phone.
Rohan Patel
Hope so, I’m audible.
Mithun Chand
Yes.
Operator
Yes.
Rohan Patel
Considering that this year, our base for the cotton is the lowest and we expect that next year the production — there are no more production challenges. So with this low sales base, how much can cotton can grow from? Can we get back towards INR350 crore, INR400 crores base next year?
Mithun Chand
One second. So just seeing the overall this year figures, what the exact number of cotton is. This year we have done altogether like you see cotton as such we have done close to INR340 crores this year itself, INR350 crores.
Rohan Patel
In the presentation, it is shown H1 that you did INR258 crores?
Mithun Chand
INR258 crores. One second. Adjusted to check, it should be a — sorry, sorry, I’m taking last year, sorry. Right. You are right. Cotton we have done like. Yes. We have done around INR250 odd crores. Yeah. Next year it should be like at least 20% more than what we are done now.
Rohan Patel
Okay, 20% more than what we are. And considering that our non-cotton base is higher, we are growing like 30%, 20% — around like 25%, 30% in all of the hybridized selection. So will this trend continue?
Mithun Chand
What we see is that overall this year we had a very muted growth because there are a couple of reasons. One is the cotton, we are down by more than 30% and the other thing where we are slightly down in terms of the exports. The exports were not as anticipated, for whatever reason it is. So going forward, what we see is that 10% to 12% growth and 15% to 18% of bottom line should much reflect. But next year as we see as cotton is already low, we’ll at least grow by 20% in cotton next year. And other crops, we see a good potential in most of the crops. So next year the growth rate should be in that 50% to 20%. 15% to 20% should be the growth rate for next year.
Rohan Patel
Yes. And that would lead to like 20%, 25% growth in bottom line?
Mithun Chand
It should be more than 20% plus.
Rohan Patel
Okay. And we were going to bring some — we have lost a market share in cotton due to our hybrids being matured enough and we were planning to bring two new hybrids to three new hybrids in cotton to get back our market share back. So how is the progress going over there? Have we started for this year?
Mithun Chand
Yeah, for the next year, what is what I’m saying about the 20% growth. Basically, it’s only because of these new launch products. We are seeing good traction in those products and we have given good production for those products as well. So those are the major contributors for the course of next year.
Rohan Patel
Okay. And after we reach that towards INR350 crore say pace in cotton next year. So how will cotton as a portfolio grow from over there? Like can we come back to a INR500 crore of product cotton could — can cotton be INR500 crore again like what we used to have in
Mithun Chand
Sure, what we believe internally is that we have very good pipeline products and which we have recently launched are also giving very good results. We are pretty sure that we can go back to those previous levels that we had. It’s a matter of three years or four years.
Rohan Patel
Okay. And some taking medium-term to long-term time horizon and the non-cotton portfolio should be growing like at a rate of somewhere around 15%.
Mithun Chand
And we are already — we are one of the biggest in the non-cotton segment and as a crop, as a crop, it’s growing and as a company, we are growing much better than the industry. So these two combination should — as a mix of all products, not particular to cotton, rice, but we have many other products like maize, bajra, soybean, wheat, so there are many other products. So as a whole if you divide both cotton and non-cotton segment, as cotton is with a low base, it should be in that 15% to 20% in the next three years to four years and we should be in between 12% to 15%. Overall, as a company, we see 12% to 15% growth very conservatively.
Rohan Patel
Okay. Yeah. Thanks for answering my questions and best of luck for future. That was from my side.
Operator
Thank you. [Operator Instructions] We have the next question from the line of Mohammed Patel from Care Portfolio Managers. Please go ahead.
Mohammed Patel
Yeah, hi. Sir, this is a follow-up to the previous participant. So the non-cotton has done really well in FY ’25 and the base is high. So should we expect non-cotton growth to slow down in FY ’26 to single-digit growth?
Mithun Chand
We don’t see any single-digit growth, it should be a double-digit growth, may not be like that 25% or so, but it should be maybe 12% to 15% growth.
Mohammed Patel
You are on a higher base.
Mithun Chand
Yes.
Mohammed Patel
Okay. And my next question is, so exports were INR6 crore in H1 FY ’25, what should be this number for H2 roughly?
Mithun Chand
Overall, we have done INR66 crores last year in terms of the exports. As I said earlier, there were one-time sale of INR28 crores in Tanzania which we don’t know whether we get it or not. That again depends on the government policy. Another thing we have done like INR20 crores, INR25 crores in Bangladesh. So INR25 crores of Bangladesh sale will be like INR12 crore to INR13 crores this year. We have already lost some sale in the second quarter whereas the decline in Bangladesh sales maybe like INR6 crores or INR7 or INR8 crores might be covered in other parts of the world like Vietnam, Ivory Coast, and other countries we are exporting. So that we may — we have a chance to cover.
But in terms of the time value, we need to see whether we’ll get those type of quarter or not. But going forward, if you see export as a segment, it will grow at more than 15% as a whole on a year-on-year basis. We need to take the base of this year — this year we can easily grow at 15% to 20% in vegetable in export market. We can expect to be INR20 crore, Tanzania.
Mohammed Patel
It should be much better than that.
Mithun Chand
It should be better. And if you see exact like we have done only INR6 crores from first half of export this year, next year, next half should be in between INR30 crores to INR40 crores.
Mohammed Patel
Excluding Tanzania.
Mithun Chand
Overall, Tanzania we don’t know, but it should be one plus or minus, it will be INR30 crores to INR40 crores. Okay. And on that base, we can expect to grow at 15% or 20%. Yes.
Mohammed Patel
Thank you.
Operator
Thank you. [Operator Instructions] As there are no further questions, this will be the end of the conference. Thank you for joining the call. For any other information, please be in touch with Rama Naidu from Intellect IR on 992-020-9623.
[Operator Closing Remarks]