Release Date: May 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue from operations increased by 32.82% in Q4 FY24 compared to Q4 FY23.
- EBITDA grew 3.32 times in Q4 FY24 compared to the previous quarter.
- Net profit turned positive at INR2.79 crore in Q4 FY24 from a loss of INR13.89 crores in Q4 FY23.
- Vegetable seed sales volume increased by 19.79% and revenue increased by 23.69% year-on-year.
- Exports increased by 250% compared to last year, showing significant international market traction.
Negative Points
- Cash on the books decreased to INR443 crores in FY24 from INR538 crores in FY23.
- Cotton seed production faced significant challenges, leading to a slight de-growth in volumes.
- Production costs for cotton have increased significantly, impacting EBITDA margins.
- There is a shortage of cotton seeds across the industry, affecting overall supply.
- Advances from customers have decreased, indicating potential changes in customer prepayments.
Q & A Highlights
Highlights of Kaveri Seed Co Ltd (BOM:532899, Financial) Q4 and FY24 Earnings Call
Q: Can you provide an update on the Bangladesh market, specifically regarding cotton sales?
A: Cotton sales in Bangladesh are not currently planned due to licensing restrictions. The focus is on building the brand and research in Bangladesh, which may take 2-3 years.
Q: What are the expectations for cotton market prices and production costs in India?
A: While there is potential to realize higher prices, production costs have significantly increased, impacting margins. The company expects to realize more than last year but acknowledges increased production costs.
Q: How is the maize segment performing, and what is Kaveri Seed's market share?
A: The maize segment is growing due to government initiatives and stable prices. Kaveri Seed holds a 7-8% market share and ranks among the top 5 players.
Q: What is the company's vision for the vegetable business?
A: The vegetable market is growing rapidly, with key crops being chili, okra, tomatoes, and gourds. The company expects at least 20% year-on-year growth in this segment.
Q: What is the status of advances from customers and the demand outlook for Q1?
A: Advances from customers are estimated between INR160-180 crores. Demand is strong across all crops except cotton, where production constraints exist.
Q: How is the company addressing the cotton seed shortage and its impact on EBITDA margins?
A: The cotton seed shortage is industry-wide, affecting production and increasing costs. While realizing higher market prices, the company expects a slight impact on EBITDA margins but anticipates growth in other segments to compensate.
Q: What are the company's R&D expenses for FY23 and FY24?
A: R&D expenses were INR45-47 crores in FY23 and around INR57 crores in FY24, with the majority being recurring expenses.
Q: What is the company's strategy for regaining market share in the cotton segment?
A: The company is introducing new hybrids and expects to regain market share over the next 2-3 years. Current market share is 12-13%.
Q: What are the company's plans for capital expenditure and its benefits?
A: Capital expenditure includes a new office and plant setups, including cold storage, which are now operational and expected to benefit the company from this year.
Q: What is the outlook for non-cotton segments, specifically rice and maize?
A: The company expects double-digit growth in non-cotton segments like maize and rice, with stable realizations and the ability to pass on increased production costs to farmers.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
