Buy Kaveri Seed Company, target price Rs 706: ICICI Securities

ICICI Securities has buy call on Kaveri Seed Company with a target price of Rs 706. The current market price of Kaveri Seed Company is Rs 590.55 Time period given by analyst is one year when Kaveri Seed Company Ltd. price can reach defined target.

Kaveri Seed Company Ltd., incorporated in the year 1986, is a Mid Cap company (having a market cap of Rs 3541.32 Crore) operating in Agriculture/Horticulture/Livestock sector.

Financials
For the quarter ended 30-06-2021, the company reported a Consolidated Total Income of Rs 644.86 Crore, up 841.62 % from last quarter Total Income of Rs 68.48 Crore and down -13.21 % from last year same quarter Total Income of Rs 742.99 Crore. Company has reported net profit after tax of Rs 204.74 Crore in latest quarter.

Investment Rationale
Kaveri has created strong value (FCF) over the past decade and the brokerage remains positive on medium-term growth outlook. It models the company to report revenue and PAT CAGRs of 6.5% and 10.2%, respectively, over FY21-FY23. It values the stock on DCF-based target price of Rs706 (11.3x FY23E). Key risks are sharp increase in competitive pressures and steep increase in input prices.

Promoter/FII Holdings
Promoters held 55.5 per cent stake in the company as of June 30, 2021, while FIIs held 17.5 per cent, DIIs 4.9 per cent and public and others 22.1 per cent.