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 Q4 FY 23 con-call of Nath Bio-Genes (India) which is a leading hybrid seeds seller in India. Hope you find the details useful for your own investments or to add the stock to your watch list.

 

Recently, we released our new stock recommendation for our Alpha and Alpha + Members.

As per the management, for FY 24 they are targeting 30% + growth in sales at Rs 1,200 crore with EBITDA margins of 18-20%.

If management achieves it, the operating profit will jump ~75% in FY 24 over FY 23 (on standalone basis)

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Nath Bio Genes – Insights from Q4 FY 23 con-call of the company

– General Details

  • I believe that this sector is now on the best growing track
  • After two very difficult COVID years, excess sales returns, the company has bounced back
  • Over the last few years, we have invested heavily in research and development, especially to innovate seeds, which are dream products for our farmers
  • The key constituents of portfolio are our top-ranked cotton hybrid SANKET; most popular bajra seed in the market, Super 27; 3 fast-growing paddy hybrids, visibly Dhoom, Dhadak, and Dhadak Gold; and unparalleled hybrid tomato seed Akhand; NCH 495, which is a unique chili hybrid that is hot pepper
  • Our focus on balancing the product portfolio remains intact as our NCP, that is noncotton, non-paddy portfolio contribution has enhanced to 45% from 41% last year
  • We plan to continue to give impetus to this segment, which has decent margins to make NCP as around 50% of our topline with cotton and paddy contributing to the balance 50%

– Cotton

  • We sold almost 13.80 lakh cotton packets in FY ’23, which is an increase of around 16% YOY
  • Our highly ranked cotton seed SANKET has been a key driver of this performance, and it continues to be a top-ranked cotton seed in the country
  • The percentage of illegal BT comes around 18% to 19%, right? The majority in Gujarat and Maharashtra followed by Telangana and Andhra
  • This year, it won’t impact much because the last year performance of the HTBT have not received well

– Paddy

  • Paddy was generally maintained in volume and value
  • We are trying to change the product mix more to hybrid, which gives us definitely much better margins

– Bajra

  • Bajra segment delivered a strong growth in value and volume terms both with the volumes increasing by 58% and the value increasing by 66% to INR 32 crores

– Wheat

  • Wheat segment had a unique year with zero sales returns. It grew in volume by 23% and value by 36%

– Vegetables

  • Vegetables segment also grew in value by 16% to INR 33.49 crores, though volumetrically, it declined by 13%

– Impact of El Nino

  • In terms of kharif cropping pattern, not much changes due to El Niño or La Lino
  • I think there will only be little bit of delays in planting based on the delayed rainfall. But otherwise, the cropping pattern generally remains the same

– Guidance

  • We are confident of a good growth this year and are working towards the 10% to 15% topline growth while maintaining our gross margins
  • We would continue to have a steady growth in cotton and paddy. However, we continue to plan to give impetus to other field crops and vegetable for enhanced growth
  • Our vision is to cross INR 500 crores of topline in three years’ time

(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.com/

 

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