Kaveri Seed Company Limited's standalone revenue for the quarter ended June 2018 came in at Rs581.89cr, marginally down 1.5% yoy. The operating profit for Q1FY19 came in at Rs203.51cr, down 1.6% yoy. The EBITDA margin remained stable yoy at 35% in the period. The adjusted net profit after tax (PAT) stood at Rs210.58cr in Q1FY19, up 4.1%. The revenue and operating profit missed the street estimates of Rs614cr and Rs222cr by 5% and 8%, respectively. However, the net profit is in-line with the estimates of Rs211cr on account of higher other income of Rs16.83cr in Q1FY19 vs Rs4.29cr in Q1FY18.
• Cotton volumes declined by ~9% in Q1FY19, which was supported by significant growth of 25% in non-cotton business, especially hybrid rice, selection rice, and sunflower. Cotton volumes were impacted by lower cotton acreage during the inception of the season. Andhra Pradesh, Telangana, and Karnataka state volumes were impacted due to the use of illegal herbicide and down-trading by farmers. Meanwhile, strong traction in volumes was witnessed in Gujarat. With significant market share gains, the company attained market leadership in the Gujarat market for the first time.
• The profitability has been impacted on account of reduction of cotton seed prices by Rs60 per packet, resulting in a top-line decrease of Rs35cr and bottom-line decrease of Rs12cr to 13cr. This impact was moderated by higher non-cotton profitability.
• The company reported a gross profit margin of 46.5%, down ~151bps yoy in Q1FY19, due to likely drop in realization levels.
• The EBITDA margin remained stable yoy despite drop in the gross margin on account of decline in employee benefits expense and other expenses by 1.3% and 14.6% yoy to Rs11.65cr and Rs55.30cr in Q1FY19, respectively.
• The effective adjusted tax rate of the company for Q1FY19 was 2% vs. 1% in Q1FY18.
Kaveri Seed Company Ltd is currently trading at Rs619.60, up Rs26.45, or 4.46%, from its previous close of Rs593.15 on the BSE.
The scrip opened at Rs598.85 and has touched a high and low of Rs623.50 and Rs598.85, respectively. So far, 22,85,871 (NSE+BSE) shares have been traded on the counter. The stock is currently trading below its 50 DMA.
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