Kaveri Seed Company Limited — Q2 FY26 earnings call

Call held 7 Nov 2025

Management summary

Kaveri Seed Co. reported a strong H1 FY26 with revenue growth of 17.09% and EBITDA growth of 11.12%, driven primarily by robust performance in Maize and Vegetable segments. However, Q2 FY26 saw a net loss of ₹15.05 crore, and cash-on-book decreased significantly. Challenges in the cotton segment due to illegal seed usage and inability to pass on increased costs impacted overall profitability, leading to higher inventory levels.

Highlights

  • Revenue from operations registered a growth of 17.09% to ₹1,041.91 crore in H1 FY26 compared to ₹889.85 crore in H1 FY25.

  • EBITDA grew by 11.12% to ₹333 crore in H1 FY26 compared to ₹299.68 crore in H1 FY25.

  • Maize volumes increased by 29.7% leading to a 56.76% increase in revenue, showcasing strong potential in the non-cotton portfolio.

  • Vegetable seed revenue increased by 31.06%, with management bullish on continued good growth in the second half.

  • Board recommended a 250% dividend, equivalent to ₹5 per equity share on a face value of ₹2.

Concerns

  • Net profit for Q2 FY26 was a loss of ₹15.05 crore.

  • Cash-on-book declined to ₹363 crores in H1 FY26 from ₹559 crore in H1 FY25, a decrease of 35.06%.

  • Cotton sales were impacted by increased illegal cotton seed usage and higher cost of production, which could not be fully passed on, affecting profitability.

  • Inventory has gone up significantly year-on-year, particularly in cotton, due to lower-than-anticipated sales and strategic buffer stocking.

Key financials

2 periods

Q2 FY26

  • Revenue
    ₹96.61 Cr
  • EBITDA
    ₹0.16 Cr
  • Net Profit
    ₹-15.05 Cr

H1 FY26

  • Revenue
    ₹1,041.91 Cr
    YoY +17.1%
  • EBITDA
    ₹333 Cr
    YoY +11.1%
  • Net Profit
    ₹301.45 Cr
    YoY +7.9%

What they filed

Q1 FY27: revenue down 13.8%, net profit down 14.2% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue82 155 77 945 97 +18%180 +16%82 +6%815 −14%
EBITDA-6 13 -15 322 -6 +0%18 +38%-14 +7%281 −13%
Net profit-3 15 -29 316 -15 −400%7 −53%-26 +10%271 −14%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

SegmentRevenue GrowthVolume Growth
Maize56.8%29.7%
Cotton——
Hybrid Rice21.5%0.9%
Selection Rice11.1%2.6%
Vegetable Seed31.1%—

Capital allocation

high confidence
  • Capex Capex disclosed
    • R&D expenses (recurring) ₹15 Cr
    • R&D expenses (recurring) ₹20 Cr
    • New office and R&D facility setup
    For last year, the entire R&D spend was Rs. 60 crores odd. This year, the R&D spend, if you take in a quarter wise, it will be slightly here and there. But every quarter, we will be spending in between Rs. 15 crores to Rs. 20 crores. I am talking about only recurring expenses. Again, CAPEX is different. If you observe the balance sheet, there is an increase in the amount of depreciation also. Yes. So, that is one because we have set up a new office and this year, this quarter, we started the R&D facility also. So, both are impacting the depreciation.
  • Dividend ₹5/share (interim)
    Board has recommended 250% dividend i.e. Rs. 5 per equity share on a face value of Rs. 2 per equity share.
  • Liquidity Cash ₹363 Cr Cash-on-book stands at Rs. 363 crores as against Rs. 559 crore in the previous period.
    Cash-on-book stands at Rs. 363 crores as against Rs. 559 crore.

Guidance & targets

Volume

  • Maize volume growth Volume · H2 FY26 · High confidence Good volume growth
    So, we are very much bullish on May. And we have good inventories also. We have planned inventory for this Rabi. Anticipating good Rabi. So, we will see a good volume growth in Maize even in the second half.

    — Mithun Chand

Profitability

  • Q3, Q4 performance Profitability · Q3, Q4 FY26 · High confidence Better than last two quarters
    And Q3, Q4 also will do better than the last two quarters, in both in terms of the revenues and in terms of the profitability.

    — Mithun Chand

  • Profit margins Profitability · Future · Medium confidence Go back to previous profitable margins
    But, this year was one of the year where we had taken a hit, but we'll definitely go back to our own previous profitable margins.

    — Mithun Chand

Cost

  • Cost of production Cost · Next year · High confidence Remain same or come down
    This year, the cost of production was up by more than 15% to 20%. That's the reason the entire cost was not passed out, passed to the farmer in one go. Because previous year, most of the companies were not having inventories and their production was very aggressive. This year, the cost will remain the same or will come down compared to last year.

    — Mithun Chand

Exports

  • Exports revenue Exports · This year · High confidence ₹35 crores range
    In fact, we should be in that Rs. 35 crores range this year in terms of exports.

    — Mithun Chand

  • Exports growth Exports · This year · High confidence 25% to 30% more than last year
    But we will be growing at least like 25% to 30% more than last year.

    — Mithun Chand

Revenue

  • Overall revenue growth Revenue · This year · High confidence 15%
    So, we've already grown at 17% in terms of revenue in the first half. Second half, definitely it will improve.

    — Mithun Chand

Market Size

  • Hybrid seed market size (India) Market Size · by 2030 · High confidence $6 billion from $3 billion

    From $3 billion today

    They say that by 2030, the hybrid seed market itself will be like $6 billion from $3 billion.

    — Mithun Chand

Segment Growth

  • Vegetable hybrid market growth Segment Growth · Year-on-year · High confidence More than 18% to 20%
    Vegetables are a very big market. Year-on-year, the vegetables are growing at more than 18% to 20% hybrid vegetable markets.

    — Mithun Chand

  • Mustard segment growth Segment Growth · Year-on-year · High confidence More than 40%
    In terms of only in mustard segment, we have grown by more than 40% year-on-year with a small base.

    — Mithun Chand

New Products

  • New products in cotton segment New Products · by FY28 · High confidence All new products
    and by FY'28, you will have all the new products in the cotton segment.

    — Mithun Chand

Inventory

  • Inventory normalization Inventory · Next 2 or 3 quarters (6 to 9 months) · High confidence Normalized
    stock and everything will get normalized in next 2 or 3 quarters, 6 to 9 months it will get normalized.

    — Mithun Chand

What to watch in Q3 FY26

Inventory normalization

Next 2-3 quarters (6-9 months)
Current High inventory, especially cotton
Target Normalized inventory levels

Why it matters

High inventory ties up capital and can lead to write-downs if not managed effectively; normalization indicates improved sales and operational efficiency.

stock and everything will get normalized in next 2 or 3 quarters, 6 to 9 months it will get normalized.

Risks & concerns

  • Illegal cotton seed usage

    high

    Increased illegal cotton seed usage impacted cotton sales and profitability, leading to volume decline and inability to pass on costs.

    Management acknowledged

  • Inability to pass on increased production costs in cotton

    high

    Cost of production increased by 15-20%, but prices could not be raised in cotton due to market conditions, impacting margins.

    Management acknowledged

  • High inventory levels

    medium

    Significant year-on-year increase in inventory, particularly cotton, due to lower sales and buffer stocking, though management states it's saleable.

    Management acknowledged

  • Extended monsoon impacting sowing and sales

    medium

    Heavy rains delayed sowing patterns and impacted Q1 sales, but management expects good Rabi season due to moisture levels.

    Management downplayed

  • Uncertainty regarding new GM crops and trade deals

    medium

    No progress on GM crop approvals or clarity on US-India trade deal, which could impact maize.

    Management not addressed

  • Tax demand from Commissioner of Tax

    medium

    Company is in the appeal stage regarding a tax demand, with no fresh updates.

    Analyst acknowledged

Q&A highlights

6 direct
Growth strategy for vegetable seeds Direct
Vegetable market is a very competitive market and it's a year-long business... we are very much focused on vegetables. As you rightly said, we have intensified our R&D team. We are much focused on few vegetables and we have a separate dedicated team... Going forward, we are very bullish on vegetables and definitely we will be achieving good growth in vegetables. And this year also, in the second half, we see a good growth in vegetables.

Analyst questioned the lack of traction despite R&D focus; management reiterated commitment and bullish outlook for H2 FY26.

Asked by Yogesh Mittal

R&D spend and employee expenses Direct
For last year, the entire R&D spend was Rs. 60 crores odd. This year, the R&D spend, if you take in a quarter wise, it will be slightly here and there. But every quarter, we will be spending in between Rs. 15 crores to Rs. 20 crores... employee and other expenses will be in between the 12% to 15% rise. One is that increments and the other is new headcount because as we are adding new crops and new people, new R&D facilities, that is how the costs are going up.

Clarified recurring R&D expenditure and the drivers behind increased employee and other expenses, linking them to strategic growth initiatives.

Asked by Dhruv Saraf

High inventory levels, especially cotton, and its valuation Direct
Basically, we take the inventory cost at cost. We'll not take at the selling price. We'll take it at cost, cost incurred by the Company... all the inventory which is there in the books are saleable inventory and we are not worried about the inventory as it's all fresh production. In terms of cotton, the inventory stays for 3 to 4 years. So, we are not worried about that.

Addressed concerns about inventory valuation and potential write-offs, assuring that inventory is valued at cost and is saleable, with cotton having a longer shelf life.

Asked by Amit Doshi

Impact of extended monsoon on seed demand and Rabi season Direct
We don't see that as of now, because usually this year, we have seen an excess rainfall... But whereas in the second half, there's one positive point is that all the tanks are full, the moisture levels are pretty good. So, we see good Rabi coming up. No doubt, the season got extended by, delayed by a week or two. But we don't see any threat as of now.

Management provided a positive outlook for the Rabi season despite initial delays caused by extended monsoon, citing good moisture levels.

Asked by Sonaal Kohli

Gross margin decline and ability to pass on costs Direct
Basically, if you take the margins, we are down by like 1.5% to 2% in terms of the EBITDA levels... The major portion, the 2%, 2.5% was rising the cost of goods... in cotton, we were not able to pass it on... But, this year was one of the year where we had taken a hit, but we'll definitely go back to our own previous profitable margins.

Explained the reasons for margin compression, specifically the inability to pass on increased production costs in the cotton segment, but expressed confidence in recovering margins.

Asked by Sonaal Kohli

Update on new GM crops and US-India trade deal impact Partial
As of now, nothing. Nothing has moved in terms of the government. It stands still there. There's sort of confusion even with the U.S.-India trade deal also. Nothing is moving forward. So, we need to wait. We need to wait for some more time to get clarity on that.

Highlighted the ongoing uncertainty and lack of progress regarding new GM crop approvals and potential impacts from the US-India trade deal on maize.

Asked by Siddhant

Sustainability of maize growth and impact of floods on receivables/inventory Direct
We see a good potential in maize crop and we don't see any threat in maize crop at all. And we are very much bullish on maize... In terms of the production, we do take production in areas, when these types of rains are there, we are also part of it, even that is impacted. That is the reason we de-risk our production model, because we give it in many states and many seasons. So, that's a continuous activity, somewhere here or there, but as of now we don't see much of impact, because most of the crops are not sown yet. ... Not much. We don't have any, regarding these floods, we don't see any impact on the receivables.

Management expressed strong confidence in maize growth sustainability and downplayed the impact of recent floods on production or receivables due to diversified production model.

Asked by Balaji

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Detailed narrative

Q2 & H1 FY26 Financial Performance Overview

Kaveri Seed Co. reported a robust H1 FY26 with revenue from operations growing 17.09% to ₹1,041.91 crore, up from ₹889.85 crore in H1 FY25. EBITDA also saw an 11.12% increase, reaching ₹333 crore compared to ₹299.68 crore in the prior year. Net profit for H1 FY26 stood at ₹301.45 crore, a 7.89% increase from ₹279.41 crore. However, Q2 FY26 alone recorded a net loss of ₹15.05 crore on revenues of ₹96.61 crore, with EBITDA at a marginal ₹0.16 crore, indicating seasonal weakness in the quarter.

Segmental Performance and Growth Drivers

Maize emerged as a significant growth driver, with volumes increasing by 29.7% and revenues surging by 56.76%, highlighting its potential in the non-cotton portfolio. Vegetable seed revenue also showed strong growth at 31.06%. In contrast, cotton sales were impacted by illegal seed usage, leading to a volume decline of over 20%, although new products contributed 36% to cotton volumes. Hybrid rice volumes grew modestly by 0.9% with a 21.48% revenue increase, while selection rice saw 2.6% volume growth and 11.07% revenue growth.

Profitability Challenges and Cost Management

The company experienced a 1.5% to 2% decline in EBITDA margins, primarily due to increased cost of goods, which rose by 2% to 2.5%. While cost increases were passed on in other crops, this was not possible in the cotton segment due to market conditions and high inventory. Management acknowledged taking a hit this year but expects to return to previous profitable margins. R&D expenses are projected to be ₹15-20 crore per quarter, contributing to increased depreciation due to new office and R&D facility setup.

Inventory and Cash Position

Cash-on-book decreased significantly to ₹363 crore in H1 FY26 from ₹559 crore in H1 FY25. This was partly attributed to a build-up of inventory, particularly in cotton, due to lower-than-anticipated sales and strategic buffer stocking in rice and maize. Management clarified that all inventory is valued at cost, is saleable, and cotton inventory has a shelf life of 3-4 years. They anticipate inventory normalization within the next 6-9 months.

Outlook and Future Growth Strategies

Management expressed bullishness on the Rabi season, especially for Maize, expecting good volume growth due to favorable moisture levels despite a delayed start. They project overall revenue growth of 15% for the year, with H2 FY26 expected to outperform the previous two quarters in both revenue and profitability. The hybrid seed market in India is anticipated to double from $3 billion to $6 billion by 2030. The company is also focusing on exports, targeting ₹35 crore this year with 25-30% growth, and expects all new cotton products to be launched by FY28.

Shareholder Returns and Capital Allocation

The Board recommended a 250% dividend, translating to ₹5 per equity share on a face value of ₹2. Discussions around buybacks are ongoing, but potential law amendments might impact future buyback plans. The company's R&D spend, which was ₹60 crore last year, is expected to be ₹15-20 crore per quarter this year, contributing to new product development across segments like vegetables, where many new hybrids are in the pipeline.

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