Kaveri Seed FY26 results: non cotton growth offsets a tough cotton year

Kaveri Seed Company Limited closed FY26 with a clear split in performance between cotton and the rest of the portfolio. Revenue from operations increased to INR 1,303.77 crore in FY26 from INR 1,121.57 crore in FY25, a year on year growth of 16.25%. EBITDA for FY26 was INR 349.75 crore versus INR 274.29 crore in FY25. Net profit rose to INR 283.26 crore from INR 265.21 crore.

The company’s commentary framed FY26 as a strong year largely because growth came from multiple non cotton segments. Cotton, however, faced two headwinds that management highlighted repeatedly: an increase in illegal cotton seed availability and higher production costs.

The mix shift: non cotton drives growth

The company’s segment disclosure in the investor presentation shows that FY26 growth was dominated by non cotton hybrids and products. Non cotton revenue rose 23.17% to INR 1,060.18 crore, while cotton revenue declined 6.6% to INR 243.59 crore. On a portfolio basis, cotton contributed about 18.68% of FY26 revenue, with non cotton at about 81.32%.

Within non cotton, maize was the biggest growth driver. Maize revenue increased 40.17% to INR 403.18 crore. Management attributed this to improved acreages and stronger market demand, along with volume growth of 18.84% during FY26. Hybrid rice also delivered a strong year. Hybrid rice revenue increased 18.37% to INR 293.77 crore even though the company cited restrictions on hybrid rice cultivation in Punjab as a constraint in that state. Selection rice revenue grew 9.76% to INR 195.17 crore. Vegetables grew 8.4% to INR 69.96 crore.

A separate bright spot was exports. The investor update indicated export revenues were expected to register approximately 90% growth during FY26, and management linked this to increasing acceptance in major international markets. The company expects export performance to remain strong.

Cotton: pressure from illegal seed and cost inflation, but new hybrids gain share

Cotton was the weak segment for FY26. The investor presentation explicitly stated cotton sales were impacted due to an increase in illegal cotton seed availability. It also stated that higher cotton seed production costs adversely affected profitability margins.

Despite these challenges, management placed significant emphasis on the traction of new cotton products. The contribution from new cotton products increased from 10.3% to 30.05% in FY26, which management described as evidence of strong acceptance of newly launched hybrids and a strengthening of the cotton portfolio.

On the conference call, management said cotton should grow in FY27, citing improved sentiment and an initial trend of rising cotton acreage. When asked about illegal BT cotton, management said it was continuing in Gujarat but did not see a rise in other regions. Importantly, management stated it was not competing with illegal cotton seed, but with legal BT cotton competitors.

The pricing environment remains constrained. Management indicated that price increases similar to last year may not be possible in FY27. However, they also said production costs are slightly lower than last year due to higher yields, which could support margins even without price increases.

Q4 FY26: small topline growth, mixed segment trends

In Q4 FY26, revenue from operations was INR 82.21 crore compared to INR 76.95 crore in Q4 FY25, a growth of 6.8%. The quarter is seasonally less representative for seed sales, but it still provides useful signals about category trends.

The company’s presentation showed non cotton revenue fell 8.1% to INR 68.43 crore, while cotton revenue increased to INR 13.78 crore from INR 2.49 crore. Within non cotton in Q4, maize revenue increased 15.8% to INR 30.05 crore and vegetable revenue increased 1.7% to INR 20.25 crore. Selection rice declined sharply in Q4 to INR 4.15 crore from INR 10.61 crore.

Exports remained a standout. The investor update stated export revenue recorded approximate growth of 76% in Q4.

Working capital: inventory build and lower advances

A major part of the Q&A focused on working capital, especially inventory. Management said inventory increased about 17% year on year because the company produced more intentionally to maintain buffer stocks, given competition for production areas. Management also stated yields were 5% to 7% higher, which further increased inventory.

Concerns about shelf life and potential write offs were addressed directly. Management said cotton seed lasts for 3 years, and that the inventory on hand was mostly new production, with maximum age around 1.3 to 1.5 years. They indicated that any remaining inventory can be carried into the next season.

The call also discussed lower advances from customers. Management said advances were INR 75 crore to INR 80 crore lower compared with last year, and that channel cash flows and farmer sentiment were tight. Management added that the company did not push for higher advances because taking advances requires providing higher incentives, which would further shrink margins.

FY27 outlook: volume led growth and margin improvement bias

Management’s outlook for FY27 was more specific than typical qualitative commentary. They guided to overall revenue growth of 15% to 20%, stating that the majority of the contribution would come from volume growth because price increases may not be taken.

Within that, cotton is expected to outperform. Management indicated cotton growth could be more than 20% and should beat the overall company growth rate. They also said most of the growth anticipated in cotton should come from new products.

On margins, management expects improvement versus FY26. The logic provided was that production costs are slightly lower due to higher yields, and other expenses should be the same or lower, while pricing remains at last year levels.

The company also shared a near term operational outlook for Q1 FY27. It expects growth in cotton across North, Central and South India driven by new hybrids, hybrid rice growth from markets including Punjab, Uttar Pradesh, Bihar, Chhattisgarh and Jharkhand, continued strong exports, and a positive vegetable seed outlook. The company also expects growth in rainy millet across Rajasthan and Uttar Pradesh.

Capex and R&D: land, buildings, and processing capacity

On capital investment, management stated that capital work in progress relates mainly to office building work, land, and plant and machinery. They cited one building project of about INR 30 crore and said land acquisition is for R&D. They also referenced investment in seed processing unit machinery. The discussion did not include commissioning timelines or quantified capacity additions.

Other disclosures: taxes, regulation, and brand architecture

The call also touched on a tax dispute related to treatment of income as agricultural income. Management said the company won at the commissioner appeals level and noted that across the seed industry many companies have won against the tax department, including at higher forums. Management stated it was confident about the nature of the income and said there were no other litigations as of now.

On regulation, management said BG III trials were moving at a very slow pace with nothing concrete. On the Seeds Bill, management said it was moving actively and could come during the year, but did not provide a date.

Management also clarified the use of subsidiary brands. They stated the Aditya brand and another subsidiary Genomix are used to market different products from the core Kaveri offering. They added that these entities can compete in some cases, because the hybrids and segments they market differ.

Takeaways

Kaveri Seed’s FY26 performance was powered by non cotton categories, with maize and rice providing the strongest revenue momentum and exports scaling sharply. Cotton remained under pressure from illegal seed availability and cost inflation, but the faster adoption of new cotton hybrids is a key internal positive.

FY27 guidance suggests management expects a volume led growth phase, with cotton expected to grow faster than the company average and margins expected to improve due to lower production costs. Working capital will remain a focus area, given the deliberate inventory build and the reduced channel advances described on the call.