KSCL - Kaveri Seed Company Ltd Share Price

In the Q3 and nine-month results conference call held on February 10, 2026, Kaveri Seed's management provided an optimistic outlook for the future. Key points include revenue from operations for the first nine months of FY '26 amounting to Rs.1,221.56 crores, reflecting a growth of 16.94% compared to Rs.1,044.61 crores in the same period last year. EBITDA also saw an increase of 10.35%, reaching Rs.358.39 crores versus Rs.324.78 crores. Net profit grew by 4.9% to Rs.308.91 crores from Rs.294.46 crores.

For Q3 FY '26, the company reported revenue of Rs.173.65 crores, a 16.08% increase from Rs.154.77 crores, while EBITDA was Rs.25.38 crores, a slight rise of 1.14% compared to Rs.25.09 crores. The net profit for the quarter stood at Rs.7.46 crores. The management noted strong revenue growth from maize and selection rice volumes and pointed towards a favorable performance in segments like cotton and vegetables.

Forward-looking statements from management highlighted the expected growth in spring maize in states such as Bihar and UP. Additionally, the company anticipates continued revenue increases from its investment in expanding plant capacities and R&D, with a focus on new product development in cotton and non-cotton segments.

The management acknowledged challenges faced in maize pricing and production costs but projected stability and normalization in pricing going forward, with cotton volumes expected to reflect improved market dynamics. Notably, exports enjoyed a substantial growth of 86% in revenue during the quarter, which is expected to continue annual growth. The management remains optimistic about the future, expecting continued contributions from new products alongside a strategic approach to inventory management.

Question 1: What percentage of annual revenue is currently reinvested into R&D and breeding? How should this trend evolve?

Answer: Our current spend is between 5% to 10% of our total revenue, including revenue and capex. In the future, we expect this to stabilize at a lower percentage compared to last year, as most of our capital expenditures have already been completed.

Question 2: How many new hybrids are expected to be commercialized annually across cotton and maize and rice?

Answer: We don't track the numbers precisely, but we maintain a pipeline of over 200 hybrids across different segments. For significant crops like rice, maize, and cotton, we expect at least 8 to 10 hybrids to perform very well annually.

Question 3: Why are Q3 gross margins down almost 500 basis points year-on-year?

Answer: The primary reason is the elevated cost of production, particularly in crops like cotton, which we couldn't fully pass on to farmers. In this quarter, gross margins fell by approximately 4% compared to last year, largely due to these high costs.

Question 4: Is there an expected increase in costs of production for the coming season across cotton and non-cotton crops?

Answer: Year-on-year, the cost of production has not significantly increased and may have even decreased in some areas. We anticipate stabilizing costs, allowing for potential price increases. Generally, production prices should normalize to historical levels between 45% to 48%.

Question 5: What are the key drivers behind the strong growth in the non-cotton segment, which showed a 59% increase?

Answer: This growth stemmed from multiple crops within the other crops category, including wheat and mustard. The strong performance in these segments contributed significantly to the overall revenue growth.

Question 6: Could you provide the revenue breakup for the non-cotton segment?

Answer: Currently, I don't have the specific revenue breakdown for this segment. However, it comprises a small fraction of our overall revenue since more than 80% comes from maize, cotton, and rice.

Question 7: What are your views on the Draft Seeds Bill for 2025?

Answer: The new Seed Bill aims to create a more organized market by addressing issues like 'one nation, one license' and proper hybrid registration. Overall, it looks promising for farmers and the industry, although we are still discussing various aspects before its passing.

Question 8: With RS. 300 crores in cash, what is the company's capital allocation priority?

Answer: We aim for organic growth and plan to revisit buybacks in the next quarter. Given our current situation with inventory buildup, liquidity is temporarily constrained. We remain open to inorganic growth opportunities as cash stabilizes.

Question 9: How is the company handling demands from income tax authorities of RS. 56 crores and RS. 70 crores?

Answer: We are appealing both cases. Currently, we show these demands as contingent liabilities, but we've made appeal payments for both amounts. We haven't made provisions because we have cash reserves available.

Question 10: Can you update on the cash situation and its impact on receivables?

Answer: Our receivables have increased modestly, from about RS. 175 crores to approximately RS. 250 crores due to higher sales. However, this does not involve significant government sales, and we're not worried as we have policies to manage collections effectively.