Hello Sir,
Hope you are doing well.
Last 2 years were not so good for hybrid seeds sellers. There was covid-19 and also excess sales returns.
Source: Nath Bio-Genes website
We went through details of hybrid seeds makers and in general all of them sound bullish for the years ahead.
Below, we have shared interesting insights from the Q2 FY 24 con-call of Nath Bio-Genes (India) which is a leading hybrid seeds seller in India and quotes at less than 10 times earnings.
Hope you find the details useful for your own investments or to add the stock to your watch list.
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Nath Bio Genes – Insights from Q2 FY 24 con-call of the company
– General
- We are making good progress on our earlier stated strategy of improving contribution from non-cotton and non-paddy segment
- The contribution to non-cotton and non-paddy segment increased from 22% in Q1 FY ’21 to 39% in Q2 FY ’24
- Our dream product basket, consisting of top-ranked cotton hybrid, Sanket; most popular bajra seed, Super-27; three fast-growing paddy hybrids, Dhoom, Dhadak and Dhadak Gold; hybrid tomato, Akhand; and NCH-495, a unique chili hybrid, all have performed exceptionally well and continue to be top ranked performers in the market
– Industry
- We have faced a very weak monsoon this season, that is kharif 2024. The overall sentiment in the farming community is not that positive
- This is despite the commodity prices exceeding the minimum support price in practically all the crops like maize, cotton and also paddy
- The rabi sowing could be impacted because of the weak rainfall
– Cotton seed
- Cotton remains the cornerstone of the Nath Bio-Genes operations. In H1 FY ’24, the company sold 13.10 lakh cotton packets, making a 17.2% rise over last year
– Paddy
- We are gradually shifting our focus to hybrid paddy without losing sight of OP paddy. This is because of high-value products
- The volume H-to-H grew by 32% and the value grew by 38.74%
- Paddy last year was around 43,000 quintals, which in H1 has crossed almost about 54,000, so 53,901 to be precise
- Value wise, basic paddy and hybrid paddy contribution is around 50-50
– Bajra seed
- Our star product, Super-27, is performing extremely well. Lead by this product, the bajra segment grew by 28.78% in value, although the volume growth was only 14.72%
– Vegetable seeds
- We have grown around 16% over last year. And this year, we are expecting at least minimum 20% growth in FY 24
- Vegetable last year was around INR 33 crores
– Exports
- We have been putting a lot of efforts to expand our geographical footprint. And this quarter, we were successful in getting our fusion BTS cotton registered successfully in the Philippines primarily and sales should come in soon
- Our efforts in other locations, especially Africa, have been getting impacted on account of geopolitical uncertainties
– Guidance
- I am expecting around 15%-plus on the top line. And we hope to continue to maintain our EBITDA of 16% and the net profit margin of around 14%. This is a guideline for FY 24
(End)
Disclaimer: This is not a recommendation to buy/sell Nath Bio Genes. The securities quoted are for illustration only and are not recommendatory.
Best Regards,
Ekansh Mittal
Research Analyst
Web: https://www.katalystwealth.
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