Bayer CropScience Ltd: The crop protection and agri-products arm of German company Bayer AG, is in preliminary talks to purchase a minority stake in Hyderabad-based Kaveri Seeds as double-digit growth in hybrid seeds sales make India an attractive and automatic investment choice for global giants.
kaveri up 10% on this news
The news if correct can be a big plus for kaveriā¦ It will increase the credibility of kaveri management and provide them with technology upgradeā¦
There is a big IF though and news needs to be confirmed by both managements.
Take it with a pinch of salt till management confirms it. Only couple of months back they(ET) reported that Accelya is on block and named the people who are in race.
http://www.bseindia.com/corporates/anndet_new.aspx?newsid=3ffb9dab-c711-44ae-8b5f-afc65de3b0af
| Clarifies on News item | 09 Oct 2013 13:04 | |
| With reference to the news item appearing in a leading financial daily titled "Bayer in Talks to Buy into Kaveri Seeds", Kaveri Seed Company Ltd has clarified to BSE that "the management of Kaveri Seed Company Ltd, strongly denies the strategic alliance of Bayer Company nor any of its associate Company for any technical Know-how. we never had talks with them for equity investment. Hence we deny any such truth in the published news dated October 09, 2013. We are also enquiring with Economic Times News paper as to how and through whom this wrong information was gathered." | ||
Hi Guys,
Letās focus on Kaveri Seed next round of questioning.Please helpon extracting the most out of the interactions. For me the (top-of-mind) focus areas would be:
1). Corn - what is the size of the opportunity? Have they caught up with the biggies, how close or how far? This year they could not really capitalise - on matching the demand? Will they be very aggressive next year?
2). Cotton - Where are they now. Nuziveedu just has the nose ahead - 6.6 Mn vs 7 Mn? How are they placed for next year? breakups for Andhra, Maharashtra, and other large pockets? Life of existing hybrids? any new ones? Whoās the real competition next year - Ajeet? Nuziveedu wouldnāt let go so easily?
3). Rice - Hybrid Rice opportunity size? who are the biggest players? where is kaveri placed? What are the biggest challenges? When will it become significant? What are the projections for next 2-3 years/
4). Strategic Sale - No smoke without fire! ET did have Bhaskar Rao quoted as saying on the lines of āYes we are talking to MNC companies - for better technology. We are not seeking an outright sale but looking for value-additive strategic saleā. So whatās the significance and timeline for these initiatives?
donald, Most of the important questions have been covered.
Some additional queries from my side.
What kind of potential do they see from kexveg?
Microtek has been going nowhere since a long timeā¦ any plans on that front?
How do the sunflower and jowar and vegetable and other seeds feature in overall scheme of things?
Any dividend policy decided by the company in terms of div payout ratio?
Donald,
Will the recent Bombay High Court order which upholds the Maharashtra Seed Act which regulates the prices of BT cotton seeds in the state affect the company?
Tony
How serious is the price capping issues as decisions from Andhra & Mumbai high court are not in favour of seed cos?
How could the PE rating of company improve? If capex is not there cud the dividend payout be improved? Can accounting be done by a reputed big 5 Firm ? Zero taxation issue is permanently solved or still can rear its head someway? How can co get the pricing power ?
Whats the growth plan for Gujarat,Maharashtra,North & Rest of India besides AP? Growth can come only from these regions.Why is DCM Shriram doing so well in North?
Sharad pawar put up an interesting point.India NGOS n Courts hv banned GM seeds on health concerns except for cotton but we are happily importing & consuming soya n other oils made from GM seeds . Is it only a matter of time when these GM seeds production will be allowed in India .if yes how is Kaveri preparing for it & what cud be its imapct?
Abroad Seeds is a $ 40 Billion business why only 1-1.5 Billion business in India? What does it say abt the growth prospects?AS such all MNC seed cos are salivating at Indian market.How will Kaveri counter the competition?
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Hi Donald,
If possible, please ask them about how they are able to gauge the demand of various seeds for the next sowing season with such a high precision (this year we saw that Kaveri was able to forecast the increase in acreage of maize unlike the market leader Monsanto)? What techniques do they adopt for gathering the data for next sowing season? Is it something different than other seed companies?
Some rough excerpts from conf call Q1FY14,
āMaize rabi season we should not be doing as as Q3 last year. last year we did 75 cr in q3 in maizeā
conclusion: This year maize q3 should be <75 cr
Last year maize q3 was 60 cr.
Interesting interview of Randy Dishmon of Oppenheimer fund (http://online.barrons.com/article/SB50001424053111903320604579109212988818026.html)
Key Excerpts: (emphasis mine)
Q: An example of a great business you bought at a phenomenal price?
A: Monsanto (MON). You routinely have scares about genetically modified food. Scares took the share price into the low $70s. Itās now at $106. These companies also do conventional breeding, the same way itās been done for 300 years. That can improve yields in the developing world where they need more food. The solution is sitting in Monsanto, Syngenta (SYT), KWS Saat (KWS.Germany) and Kaveri Seed (EQKSCL.India) a all names I own a with great technology and a great opportunity to change the world in a positive way in a very misunderstood business: seeds.
Q: Would you buy any of these today?
A: With a three- to 10-year view, the whole sector is worth buying.
<75 cr
Last year maize q3 was 60 cr.
Question we need to ask ourselves is how much difference will sales of 75 vs sales of 60 cr or whatever figure comes up in q2 fy 14 is going to make to the overall half yearly results.
The best quarter is behind us and the rest of the quarters are like tailenders of a cricket teamā¦ If they fire its well and good and if notā¦ koi gham nahi.
Net profits have increased to around 162 cr (q1 fy 14) as compared to 128 cr for fy 13.(full year)ā¦ And stock price is virtually almost at same level.
Oppenheimer funds have got into kaveri as disclosed in shareholding since past couple of quarters which is a good sign.
Has IDFC who was holding 11% stake in Kaveri seeds has completely sold off ? If so why?
Was this the reason that price was not going up inspite of good results?
http://www.moneycontrol.com/mf/user_scheme/mfholddetail_sec.php?sc_did=KSC01
Vivek, monthly portfolio disclosures on idfc mf website shows IDFC Premier still holds 1091400 shares of Kaveri seeds by 30th Sep 2013 (against 1104100 as on 31st Aug 2013)
Good to know. Was puzzled why the oldest holder of KSCL sine its IPO in 2007 is completely exiting specially when the story is intact.
I received this sms text message from vivekā¦ writing it verbatim here.
āSeems idfc has exited kaveriā¦ vivekā
Now I have a request to make to vivek gautamā¦
Before sending these messages try to find out the authenticity of these kinds of messagesā¦
Now if I rely on the text message you sent to me, it seems to indicate that you have some kind of info which markets or other investors by and large dont haveā¦
And on the other hand you ask questions on this forum whether idfc has exited kaveri or notā¦
So in effect you seem to sending unconfirmed info via text messagesā¦ I also had a similar query from a fellow investor who also told me that he received the same info from you.
Now the question comes about how to deal with this kind of info and rumoursā¦
First is not to rely on unconfirmed infoā¦ It may very well be true or false but that should not change investment thesis which should be based on fundamentals and not on who is selling or buying in the company.
Best way to go ahead is to check disclosures on bse or nse and see if a big chunk of shares have been sold in recent past.
Other option is to wait for some more time and find out from shareholding pattern disclosed by the company for sep quarter (which should be up in a short time) how many shares idfc holds.
Personally I feel that this is one of the worst forms of so called āscuttlebuttā and best ignored.
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I agree with Hitesh bhai. And I strongly feel investing is all about doing the homework and having patience rather than getting panicky etc.
A big holding like IDFC can never exit without a block deal in illiquid counters like Kaveriā¦so thats the real basic. Please exercise caution and donāt get carried away on both positive and negative newsā¦they are injurious to the investing journey.
Regards,
Ayush
From my limited experience of working with a buy side company (insurance), I can say that on account of redemption pressure, even buy side companies (MFs, Insurance, Banks etc) sell their winners first rather than their losers (even they suffer from behavioral biases). In addition, if we have conviction about a stock why should we worry about what others institutional investors are doing (doesnāt mean that we should not investigate the reasons behind their selling). Also, some of our success stories on on ValuePickr like Mayur, Ajanta etc (unlike Astral, Kaveri, PI etc) still dont have much institutional holding. Does it take away anything from the kind of wealth these stocks have generated?
One more thing is the kind of research and groundwork that is been done by the ValuePickr team is commendable and not many Sell side or Buy side analysts do these.
Regards,
Ankit