Kaveri Seed Company Limited — Q3 FY26 earnings call

Call held 10 Feb 2026

Management summary

Kaveri Seed Co. reported strong revenue growth for Q3 and nine months FY26, driven by robust performance in non-cotton segments and exports. However, profitability was impacted by higher production costs and an inability to fully pass on price increases, leading to a gross margin squeeze and modest Q3 EBITDA growth. The company also saw a significant portion of its cash tied up in inventory, while actively pursuing inorganic growth opportunities and managing ongoing income tax appeals.

Highlights

  • Revenue from operations for 9M FY26 registered a growth of 16.94% to ₹1,221.56 crores, indicating robust top-line performance.

  • EBITDA for 9M FY26 grew 10.35% to ₹358.39 crores, reflecting operational efficiency.

  • Q3 FY26 revenue from operations increased by 16.08% to ₹173.65 crores, demonstrating continued momentum.

  • Significant volume growth in key non-cotton segments: research paddy (51%), sunflower (94%), and mustard (64%).

  • Exports showed steep growth of 86% in revenue during Q3, expanding international presence.

Concerns

  • Q3 FY26 EBITDA growth was modest at 1.14% (₹25.38 crores), impacted by higher production costs.

  • Gross margins for Q3 were down almost 500 basis points year-on-year, attributed to high production costs in cotton, maize, and rice, and inability to pass on price increases to farmers.

  • Cash and books decreased to ₹309 crores from ₹409 crores in the previous quarter, with approximately ₹200 crores tied up in inventory build-up.

  • Ongoing income tax demands of ₹56 crores and ₹70 crores are pending at the appeal stage, representing potential liabilities.

Key financials

3 periods

Headline

  • Cash and Books
    ₹309 Cr

Q3 FY26

  • Revenue
    ₹173.65 Cr
    YoY +16.1%
  • EBITDA
    ₹25.38 Cr
    YoY +1.1%
  • Net Profit
    ₹7.46 Cr

9M FY26

  • Revenue
    ₹1,221.56 Cr
    YoY +16.9%
  • EBITDA
    ₹358.39 Cr
    YoY +10.3%
  • Net Profit
    ₹308.91 Cr
    YoY +4.9%

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

  • Non-Cotton Hybrids
    6.1% Volume Growth13% Revenue Growth
  • Research Paddy
    51% Volume Growth
  • Vegetable Seeds
    5% Volume Growth11.4% Revenue Growth
  • Sunflower
    94% Volume Growth
  • Mustard
    64% Volume Growth
  • Exports
    86% Revenue Growth (Q3)
  • Hybrid Rice
    17.9% Revenue Growth
  • Selection Rice
    7% Volume Growth14.2% Revenue Growth
  • Maize
    21% Volume Growth42.6% Revenue Growth
  • Other Crops (Wheat, Bajra, Sunflower, Mustard)
    59% Growth

Capital allocation

high confidence
  • Capex Capex disclosed
    • Investments in expanding plant capacities and increased R&D spend to contribute to new product share.
    Our investments in expanding plant capacities and increased spend in R&D is going to contribute for increasing share of new products in both cotton and non-cotton segments.
  • Liquidity Cash ₹309 Cr Cash and books stood at ₹309 crores, down from ₹409 crores in the previous quarter, with approximately ₹200 crores tied up in inventory.
    Cash and books stood at RS. 309 crores as against RS. 409 crores.

Guidance & targets

R&D/Capex Spend

  • R&D and Capex Spend as % of Revenue R&D/Capex Spend · going forward · Medium confidence stabilize at decently lower than last year

    From 5% to 10% of total revenue today

    As of now, our spend is in between 5% to 10% of our total revenue, both including revenue and capex. Going forward, they should stabilize at decently lower than what we have spent in the last year because most of the capex is already done there.

    — Mithun Chand

New Products

  • Number of well-performing hybrids New Products · High confidence at least 8 to 10 hybrids
    But yes, in terms of major crops like rice, maize and cotton, we have at least 8 to 10 hybrids, which are really doing well.

    — Mithun Chand

Gross Margin

  • Gross Margin Percentage Gross Margin · earlier · Medium confidence 45% to 48%
    So it will normalize to what it used to be earlier between that 45% to 48%.

    — Mithun Chand

New Product Revenue

  • Revenue Increase from New Products New Product Revenue · next couple of years starting from '26, '27 (June '26) · Medium confidence good revenue increase
    Our products have really done well, performed well, and we will see that good set of growth numbers coming in the next couple of years starting from '26, '27. I mean to say like June '26. We'll get to see good revenue increase in that.

    — Mithun Chand

Maize Volumes

  • Maize Volumes Trend Maize Volumes · Medium confidence remain good and healthy
    We think maize volumes should remain good and healthy and because the acreages are going up and the usage is also going up.

    — Mithun Chand

Illegal Seed

  • Illegal Seed Level Illegal Seed · High confidence same level as last year and increasing now
    See, that it will be in the same level as what it was in last year and increasing now.

    — Mithun Chand

Cotton Inventory

  • Cotton Stock (packets) Cotton Inventory · till the end of next year's season · High confidence 8 million to 9 million packets
    No. As of now, we are having enough stock till the end of the season, I mean to say by next year's season will be in between 8 million to 9 million packets for us, which is in line with our anticipation.

    — Mithun Chand

Receivables

  • Outstanding Receivables Receivables · year-end · High confidence ₹80 crores to ₹90 crores
    At the year-end, it will get normal. Usually, what, at the year-end, the outstanding are in between RS. 80 crores to RS. 90 crores or something like that, it should come back to those levels.

    — Mithun Chand

What to watch in Q4 FY26

R&D/Capex Spend Stabilization

going forward
Current 5-10% of total revenue, most capex done
Target stabilized at decently lower levels

Why it matters

Indicates efficient capital deployment and potential for improved free cash flow as major capex is completed.

As of now, our spend is in between 5% to 10% of our total revenue, both including revenue and capex. Going forward, they should stabilize at decently lower than what we have spent in the last year because most of the capex is already done there.

Risks & concerns

  • Gross Margin Compression

    medium

    Q3 gross margins declined due to high production costs in cotton, maize, and rice, and inability to pass on price increases to farmers.

    Both acknowledged

  • Illegal Cotton Sales Impact

    medium

    Cotton sales continue to be impacted by increased illegal cotton, affecting market dynamics.

    Management acknowledged

  • Maize Price Volatility

    medium

    Lower commercial maize prices (₹1,200-₹1,600 per quintal) affected rabi maize cultivation in key markets.

    Management acknowledged

  • Inventory Build-up

    medium

    Approximately ₹200 crores of cash is tied up in inventory, and the industry as a whole has produced more inventory, potentially leading to market flooding.

    Both downplayed

  • Income Tax Demands

    medium

    Outstanding income tax demands of ₹56 crores and ₹70 crores are under appeal, with some payments made and others as contingent liabilities.

    Both acknowledged

Q&A highlights

6 direct, 1 evasive
Q3 Gross Margin Decline Direct
This time we have explained that the cost of production was a bit high when compared to the previous years in especially like crops like cotton that has impacted to some extent as we were not able to pass on everything to the farmer... Even in maize and rice, the cost of production is a bit high when compared to the previous years.

Explains the reasons behind the significant gross margin compression in Q3, attributing it to higher production costs and limited pricing power.

Asked by Dhruv Saraf

Cash Position and Inventory Build-up Direct
All right. All right. And sir, secondly, you spoke about cash at RS. 310 crores versus RS. 410 crores in the previous quarter. So sir, has there been further investment in working capital either due to inventory or debtors? ... like majority of that, close to RS. 200 crores plus has been into the inventory.

Clarifies the reduction in cash balance is primarily due to a substantial investment in inventory, impacting working capital and liquidity.

Asked by Dhruv Saraf

Capital Allocation Priorities Partial
Sir, with over RS. 300 crores cash, like what is the capital allocation priority? Like any inorganic like opportunities or dividend buybacks? ... But in terms of the organic growth, we are open for it because as it is a very temporary situation what we are facing as of now, but maybe next three to six months the cash will be the free cash what we generate. So that we are open for inorganic growth even as of now.

Indicates a strategic shift towards considering inorganic growth opportunities, while buyback decisions are deferred to future quarters.

Asked by Amit Agicha

Income Tax Demands Status Direct
My question is with respect to the demand received from income tax authorities. In two consecutive years, we have received a demand, in 1 year we received a demand for RS. 56 crores and second year we received a demand for RS. 70 crores. ... Provision is that we have made the appeals payment for that. Other one is like we are showing it in contingent liability.

Provides an update on significant income tax demands, clarifying that some payments have been made under appeal and others are treated as contingent liabilities.

Asked by Sahil Malhotra

Impact of Maize Price Dip on Future Volumes Direct
And sir, another question is, there has been a sharp dip in maize prices... So in light of that, do you expect there would be some correction in the volumes for maize next year because of the sharp dip in prices? ... We think maize volumes should remain good and healthy and because the acreages are going up and the usage is also going up.

Addresses concerns about potential volume impact from lower maize prices, with management expressing confidence in continued healthy volumes due to acreage and usage growth.

Asked by Anurag Jain

Risk of Inventory Flooding for Kharif '26 Evasive
Okay. So do you not see the risk of extra inventory flooding for Kharif '26 as well? ... I don't see that because already it's there in the inventory. Everyone, as an industry, we all know that the inventory will be available. And everyone is wiping on that parameters.

Highlights a potential industry-wide risk of excess inventory for the upcoming Kharif season, though management downplays its impact on the company.

Asked by Dhruv Saraf

Feedback on New Cotton Products Direct
So have you received any feedback in terms of your performance of new products? You've seen products like the new products we've launched. How has the market feedback been for that? ... Our products have really done well, performed well, and we will see that good set of growth numbers coming in the next couple of years starting from '26, '27.

Provides positive feedback on the performance of new cotton products, indicating future revenue growth potential from these innovations.

Asked by Dhruv Saraf

Draft Seeds Bill 2025 Direct
What are your views on the Draft Seeds Bill for 2025? And has there been any recent developments or updates? ... But overall, it looks good when compared to the previous one.

Discusses the potential positive impact of the new Seeds Bill on market organization and farmer benefits, despite ongoing debates on some facts.

Asked by Saania Jain

2 min read 6 chapters

Detailed narrative

Financial Performance Overview for Q3 and Nine Months FY26

Kaveri Seed Co. reported a robust top-line performance for the nine months ending FY26, with revenue from operations growing 16.94% to ₹1,221.56 crores compared to ₹1,044.61 crores in the prior year. EBITDA for the same period increased by 10.35% to ₹358.39 crores, and net profit grew 4.9% to ₹308.91 crores. For Q3 FY26, revenue from operations was ₹173.65 crores, a 16.08% increase year-on-year, though EBITDA growth was a more modest 1.14% at ₹25.38 crores, with net profit at ₹7.46 crores.

Segmental Growth Drivers

The company witnessed strong growth across several non-cotton segments. Research paddy volumes surged by 51%, sunflower volumes by 94%, and mustard volumes by 64%. Non-cotton hybrids overall saw a 6.1% increase in volumes and 13% in revenues. Maize volumes grew 21% with revenues up 42.6%, and hybrid rice revenues increased by 17.9%. Exports also contributed significantly, showing a steep 86% revenue growth in the current quarter, indicating successful international market penetration.

Profitability Challenges and Outlook

Despite strong revenue growth, Q3 profitability was impacted by higher production costs, particularly in cotton, maize, and rice, which the company was unable to fully pass on to farmers. This resulted in a nearly 500 basis point decline in gross margins year-on-year. Management expects gross margins to normalize to the 45-48% range as production costs stabilize. The company is also investing in R&D and plant capacities, with R&D/capex spend expected to stabilize at lower levels going forward as most major capex is completed.

Working Capital and Liquidity

The company's cash and books stood at ₹309 crores, a decrease from ₹409 crores in the previous quarter. This reduction is largely attributed to a significant investment of over ₹200 crores into inventory. Management noted an industry-wide trend of increased inventory production, which contributed to higher production costs. Receivables increased to ₹250 crores from ₹175 crores last year, but are expected to normalize to ₹80-90 crores by year-end, improving cash flow.

Strategic Focus on New Products and Market Dynamics

Kaveri Seed Co. is focusing on new product development, with at least 8-10 well-performing hybrids in major crops like rice, maize, and cotton. These new products are expected to drive good revenue growth starting from June 2026. The company anticipates maize volumes to remain healthy due to increasing acreages and usage, despite recent price dips. Management also addressed the ongoing issue of illegal cotton, noting it remains at similar levels to the previous year and is increasing.

Regulatory Environment and Capital Allocation

The Draft Seeds Bill 2025 is viewed positively by management, as it aims to create a more organized market, although some aspects are still under debate. Regarding capital allocation, with over ₹300 crores in cash, the company is open to inorganic growth opportunities. While dividends are consistently paid, a decision on buybacks will be made in the first or second quarter, as liquidity was previously tied up in inventory. The company is also managing ongoing income tax demands totaling ₹126 crores, with appeals pending.

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