Kaveri Seed Multibagger Stock 2020

In this post we can perform Kaveri Seed Multibagger Analysis in Warren Buffet way. This is the 1 of 3 Multibaggers where the remaining 2 can be purchased from here. Futurecaps is the ONLY advisor in India releasing 3 Agriculture Multibaggers based on the Farmers Act Advatnage.

Kaveri Seed Company

NSE CodeKSCL.NS
BSE Code532899
URLhttp://www.kaveriseeds.in/
CMP525.00
Free ReportYes
Publish DateSep-13-2020

Update: Price went up 10% after the Agriculture Reforms Bill Passed in Lok Sabha Sep 2020 LINK

About Kaveri Seed

Kaveri Seed today is India largest agriculture company specializing in Hybrid Seeds in Key Indian crops. The company has strong Research & Development (recognised by DSIR since 2001) has resulted in high – yield seeds that has made the company the trusted partner for farmers since the last three decades . It has transformed products & processes to deliver the best of science, while enhancing farm productivity.

With more than 1,00,000 production growers on 65,000 acres of land across 12 different agro-climatic zones , the company has diverse portfolio of seeds caters to key crop segments to enable crops for diverse agro – climate and soil conditions.

kaveri seed multibagger

Warren Buffet, Value & Growth Checklist

Following are the Checklist parameters:

Capitalization3000 CRbce05 green e1587451073732
History of Consistently Increasing Sales, Earnings & Cash FlowYes.bce05 green e1587451073732
Durable Competitive AdvantageModerate
Future Growth Drivers / Sector GrowthModerate. Cyclical Sector.
Conservative Debt (long term debt < 3 Net Profit)Low Debtsbce05 green e1587451073732
Debt Equity Ratio, Current RatioLow Debt, Current Ratio is 1.5bce05 green e1587451073732
Return on Equity must be Above Average20%bce05 green e1587451073732
Low CAPEX required to maintain current operationsModerate
Inventory Turnover Ratio, Debtor Days, ROCEOkay, Debtor days increasing
Management is holding / buying the stockPromoter holding is at 55% & Increasingbce05 green e1587451073732
Market Price < Intrinsic ValueAt 70% Discount Intrinsic Value Calculatorbce05 green e1587451073732
Stock Price is consolidating (now)Yesbce05 green e1587451073732
Stock Price is growing in past years along with EPS growthYesbce05 green e1587451073732
Consolidated PE, PB Ratio, PEG RatioPE 10, PB 4, PEG 0.5bce05 green e1587451073732
Cash Flow Positive, Net Profit % greater than 8%Cash Flow: +ve Profit: 30%bce05 green e1587451073732
Paying Dividends, TaxDividends: Yes Tax: Low %
EPS Growth Rate25% above past 3 yearsbce05 green e1587451073732
Jump in Trailing Result EPSYesbce05 green e1587451073732
Jump in Quarterly Result EPSYesbce05 green e1587451073732
Expected Gain in 5 Years300-500%bce05 green e1587451073732
Price Movement Graph, 52 Week High & LowOkay
Volume Analysis3 Lakhs (High)
Power of BrandModerate
Corporate Governance, Reputation of LeadersOkay
Fraud reportedNo.bce05 green e1587451073732

Positive Factors on Kaveri Seed

Here are the positive factors regarding Kaveri Seeds

  • Largest Seed Producer of India
  • Modern Plant Breeding Techniques implemented for High Yield even in Diverse Climate
  • Multi-crop Portfolio
  • Biotech Innovation, Competitive R&D & New Products developed every year
  • Strong Brand & Close Work with Farmers
  • Good Supply Chain, PAN India presence
  • 30% Growth y-o-y, 15% increase in Net Profits
  • Operating Profit Margin is 30% which is rarely seen
  • New Recognitions from CVRC on application
  • International Collabrations like HRDC, VRAP, IMIC, HPRC etc.
  • Pradhan Mantri Krishi YOjana, Fasal Bima Yojana can boost Indian demand in upcoming years
  • Export to Multiple Countries mitigates Risk of local demand
  • Low Debt Company
  • High ROE, ROCE
  • High Discount on Intrinsic Value
  • Positioned for SEBI Multicap Mandatory MF Investments

Concern Factors

Here are the concern factors regarding Kaveri Seeds

  • Cyclical Business – Only June Quarter showing Spike in Revenue & Profits
  • Lack of rainfall can abruptly affect farmers & in-turn the company
  • Availability of Land for Farming is Alarming
  • COVID impacted the operations, transportation etc.
  • No Capacity Expansions on Card
  • No Online Sales Migration during COVID Times

Summary

Based on the above analysis I would like to say that the Kaveri Seeds possess Multibagger Stock properties and one can Invest in 2020.  However one should not expect high compounded returns from this stock.  It can be considered as Moderate Risk Moderate Returns investment in the range of 300-500% in a 5-year period.

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