The Indian food industry is creating immense value addition, particularly within the food processing industry on the back of huge potential for future growth. The Indian food and grocery market is sixth largest in the world with retail accounting for 70% of the total sales. The Indian food processing industry accounts for 32% of the country’s total food market and is ranked fifth in terms of production, consumption and exports. It contributes around 8.80% and 8.39% of Gross Value Added (GVA) in Manufacturing and Agriculture respectively, 13% of India’s exports and 6% of total industrial investment. Agriculture is the primary source of livelihood for half of the country’s population with the government targeting food production of 292 million tonnes. India is also the second largest fruit producer in the world. The organic food segment in India is expected to grow at a CAGR of 10% and reach the Rs 75,000 crore mark by 2025 .The government in its turn has also introduced a slew of measures and benefits like introducing the Pradhan Mantri Samman Nidhi Yojana in Budget 2020 under which a minimum fixed pension of Rs 3,000 is to be provided to the eligible small and marginal farmers on attaining the age of 60 years. The Agriculture Export Policy approved by the government aims to increase India’s agricultural exports to $60 billion by 2022 and $100 billion in the next few years with a stable trade policy regime. India is expected to achieve the ambitious goal of doubling farm income by 2022. Kaveri Seeds is an agriculture related company and well appreciated by analysts and fund managers in most of their portfolios. The company posted strong operational performance with robust sales growth at 14.64%, while EBIDA margins stood at 39.88% for Q1FY21. The earnings per share registered a growth of 36.57% to Rs 49.67 for the period ended June 2020 compared to Rs 36.37 for the same period of the last fiscal. The company reported in its quarterly investor presentation that timely rains increased early sowing of cotton, maize and rice along with proactive planning helping in increased sales. On a consolidated basis, net sales and profit after tax stood at Rs 719 crore and Rs 295 crore respectively for Q1FY21 as against Rs 627 crore and Rs 229 crore respectively for Q1FY20. Brokers and analysts are bullish on Kaveri Seeds. The stock currently hovering around Rs 605 can appreciate by more than 30% in the next two quarters on the back of stellar performance and fund buying by institutional investors in their respective portfolios.
Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.