Release Date: May 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Nath Bio-Genes (India) Ltd (BOM:537291, Financial) reported a 10.43% increase in top-line revenue for FY24, reaching INR332 crores.
- The company's gross margin exceeded 55% during the year, maintaining a strong financial performance.
- Profit after tax increased by 16.8% to INR411 million, showcasing robust profitability.
- The company maintained a zero long-term debt position, reflecting strong financial health.
- Nath Bio-Genes (India) Ltd (BOM:537291) continues to invest in R&D, resulting in innovative products and high-performance seeds that benefit farmers.
Negative Points
- The company faces challenges in seed production due to fluctuating monsoons and a shortage of farm labor.
- There is an overall shortage of cotton seeds in the industry, which may impact supply and sales.
- Geopolitical uncertainties are affecting the company's efforts to expand in certain international markets, particularly in Africa.
- Illegal BT cotton in the market poses a competitive threat and impacts sales.
- The working capital cycle, although improving, still requires careful management to maintain positive operational cash flow.
Q & A Highlights
Q: Can you provide insights into the performance of Nath Bio-Genes hybrid paddy varieties compared to conventional varieties, particularly in terms of yield?
A: Our hybrid paddy varieties, such as Dhadak Gold, have shown a 7-8% higher yield compared to the best competition hybrids. Additionally, they have better commercial advantages, look-wise superiority, and grain size, which is highly acceptable in government procurement.
Q: How are you looking at the export markets, and what is your future outlook in that market?
A: We are targeting countries in all continents, focusing on our strengths in cotton, rice, and vegetables. We have begun activities in the Philippines and Uzbekistan, and we are exploring other regions like Egypt, Bangladesh, and Myanmar. Our goal is to expand significantly in the next five years.
Q: What is your target revenue growth for next year?
A: We are expecting a top-line growth of around 15-20% and aim to increase net profit by about 1-1.5%. This is contingent on favorable monsoon conditions and the performance of our products across various segments.
Q: What has been the CapEx for new cold storage facilities, warehouses, and commissioning godowns, and do you have any planned CapEx going forward?
A: We prefer long-term leases for facilities rather than CapEx investments to avoid maintenance costs during non-seasonal times. This strategy helps us maintain better bottom-line performance.
Q: How do you anticipate the working capital cycle to evolve over the next two to three years, and what strategies are you implementing to mitigate its length?
A: Our working capital cycle has been improving, with better control over stocks and debtors. We have been generating positive operational cash flow and receiving advanced bookings, which boosts our cash flows. We aim to continue this trend.
Q: What is the outlook for cotton seeds for FY25, and are there still shortages in terms of supply?
A: We expect a 20% growth in cotton seeds, but the industry is facing challenges due to fluctuating monsoons and labor shortages. Despite these challenges, we are making efforts to mitigate the impact and balance supply and demand.
Q: Can we expect any new product launches in the next three years, and how long does it take for a new product to realize its full potential in the market?
A: We have several products in the pipeline, including tomato, chili, cucumber, and okra. It typically takes two to three years for a new product to realize its full potential in the market.
Q: How do you plan to optimize the crop mix going forward?
A: We are focusing on high-potential crops like bajra, maize, vegetables, and supplements while maintaining a strong emphasis on paddy and cotton. Our marketing budget is designed to capture the potential of each product in different markets.
Q: Are there any steps being taken to reduce the impact of illegal BT cotton in the market?
A: The government is responsible for curbing illegal BT cotton. We focus on offering superior products to maintain our market position despite the presence of illegal BT cotton.
Q: How is Q1 shaping up, and what revenue do you foresee for this quarter?
A: The performance of Q1 depends on the monsoon. We are well-prepared for the season, and if the monsoons are favorable, we expect to meet our sales targets. Revenue projections will be clearer after the first quarter.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
