Motilal Oswal's research report on Kaveri Seeds
KSCL clocked a better operating performance in 1QFY23, led by gross margin expansion of 420bp YoY, as the company was able to maintain the cost of production similar to 1QFY22 levels. All seed categories registered a volume growth, with cotton/hybrid rice/maize/selection rice growing by 8%/6%/24%/15%. Realization took a hit across segments due to higher discounts offered in 1QFY23. We largely retain our FY23 earnings estimate while we cut FY24 earnings estimate by 8% due to lower cotton seed sales volumes. We value the stock at 11x FY24E EPS to arrive at our TP of INR560 and maintain our Buy rating.
Outlook
We largely retain our FY23 earnings estimate, while we cut our FY24 earnings estimate by 8% due to lower cotton seed sales volumes to 6.3m from 7m packets. We value the stock at 11x FY24E EPS to arrive at our TP of INR560 and maintain our Buy rating.
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