India’s agriculture sector has been a cornerstone of its economic growth, and the recent Union Budget has reaffirmed the government’s commitment to its development. With an increased focus on seed technology and sustainable farming, companies like Kaveri Seeds Company Limited (KSCL) are well-positioned to benefit from these tailwinds. Established in 1976, as one of India’s largest seed producers, Kaveri Seeds has demonstrated strong growth, particularly in key crops like maize and rice. The company’s recent financial performance further solidifies its position as a market leader.
Kaveri Seeds has a market cap of NZ$1.3bn and has risen 93% in local currency terms over the last months (to 31st March 2025). The company has a strong R&D base, focusing on developing high-yield seeds and are a trusted partner for farmers seeking to enhance farm productivity.
Strong Financial Growth Despite Challenges
Kaveri Seeds has reported impressive numbers for Q3 and the first nine months (9M) of FY25. The company’s net sales for Q3 FY25 stood at NZ$31.7 million, reflecting a 30.6% increase compared to Q3 FY24. Meanwhile, its EBITDA grew by 12.8%, and PAT (profit after tax) rose by 29%. Despite global supply chain disruptions and political unrest in export markets like Bangladesh, the company managed to maintain profitability and expand its domestic presence.
The company’s 9M FY25 financial performance was equally robust, with net sales reaching NZ$214 million, a 6.4% rise from the previous year. EBITDA and PAT growth were steady at 1.1% and 1.5%, respectively. Notably, the company maintains strong liquidity, with cash on books standing at over NZ$100 million1.
Crop Performance and Market Expansion
Kaveri Seeds has witnessed strong growth across several crop segments. The hybrid rice segment saw a 14% volume increase, driving a 27% revenue growth, while selection rice volumes (specific category of rice seeds that are carefully chosen for their quality, yield potential, and adaptability to various growing conditions) surged by 18%, contributing to a 34% jump in revenue. Similarly, maize volumes rose by 8%, leading to a 25% revenue boost. The company’s vegetable seed sales also experienced modest growth, with volumes up 2% and revenue increasing by 3%.
However, the cotton hybrid segment faced headwinds, with volumes declining by 47% and revenues dropping by 40%. This decline is partly attributed to a reduction in cotton acreage and shifting farmer preferences. In contrast, non-cotton hybrids (created by crossbreeding two genetically distinct parent plants to produce offspring with desirable traits, such as higher yield, disease resistance, or adaptability to specific environmental conditions) recorded a 23% increase in volumes and a 31% jump in revenue, compensating for the dip in cotton seed sales.
Source: Kaveri Seed, Investor Presentation *a lakh is a unit of measurement which is 100,000, in India
India's Budget and Policy Support for Agriculture
The Indian government’s latest budget has allocated substantial funds towards agricultural modernisation, with a specific emphasis on high-yield seeds and hybrid technologies. The initiatives align well with Kaveri Seeds’ expertise, creating significant growth opportunities for the company. Key budgetary allocations and policies supporting the seed industry include:
- Increased Investment in Agri R&D:
The government’s push for research-driven agriculture will likely lead to higher adoption of hybrid and genetically advanced seeds. - Subsidies for Quality Seeds:
Farmers will benefit from improved access to high-quality seeds, leading to increased demand for Kaveri Seeds’ products. - Expansion of Irrigation and Crop Insurance Schemes:
These measures ensure stable production, thereby encouraging farmers to adopt premium seed varieties. - Focus on Export Growth:
With efforts to enhance Agri-exports, companies like Kaveri Seeds stand to gain once global trade stabilizes.
Outlook and Growth Drivers
With strong financial fundamentals and policy tailwinds, Kaveri Seeds is poised for sustained growth. The company’s continued innovation in hybrid seed development, strategic expansion in non-cotton crops, and resilience in export markets position it favourably in the agricultural sector.
As India moves towards a more technologically advanced and sustainable agricultural landscape, Kaveri Seeds’ commitment to research, farmer engagement, and product innovation will likely drive its next phase of growth. For investors looking at the agriculture sector, Kaveri Seeds is a unique and differentiated story, backed by robust financials, with a supportive policy environment. The company features in the top 20 holdings in the India Avenue Equity Fund.
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