Kaveri Seeds is a leading seed company with major share (~42%) of revenues from cotton seeds that too in the Southern market. Growth strategy going forward is geographical expansion and product diversification. After many quarters, this strategy seems to be playing out and that is noteworthy as the main division of cotton seeds has reached stagnancy and there is good potential in other seeds viz. Hybrid Rice, Maize and Vegetables. Major risks are weather vagaries and government regulation. However, higher MSPs and increased government focus on agriculture are key positives for Kaveri. Being a rural focused company, the operations of the company are not impacted by the Covid-19 pandemic. For the present we have a neutral weight rating which may be upgraded if non-Cotton business is scaled up well. Valuations are cheap and return ratios high – 11-02-2021 Price: 532.20 Rating: Neutral Recommendation: Hold
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