PL First Cut – Bayer Cropscience 1QFY24

Bayer Cropscience 1QFY24 Result First Cut-Decent performance; in line with estimates

(CMP-Rs4,582; Mcap- Rs206bn; ACCUMULATE; TP-Rs4,720)

❇️ Key highlights of 1QFY24 results:

Revenue: Rs17.4bn, +4% YoY as against our/Cons estimates of Rs17.6bn/Rs17.0bn

Gross Margins: at 42.7% down 580bps YoY

EBITDA: Rs4.2bn, +8% YoY as against our/Cons estimates of Rs4.0bn/Rs4.0bn

EBITDA margin: 24.4%, +70bps YoY as against our and Cons estimates of 22.8%/23.6%

Net Profit: Rs3.3bn, +9% YoY as against our/Cons estimates of Rs3.1bn/Rs3.0bn

❇️ Comments: BYRCS reported decent set of numbers during 1QFY24. Revenue growth (up 4% YoY) (adjusted for effect of customer incentive programs growth was 9% YoY) were largely driven by strong CP sales (despite expected moderation in Round-up (Glyphosate) sales due to lower realisations) and volume growth in corn hybrid seeds. We believe strong growth witnessed in corn hybrid seeds was largely led by better maize acreages in ongoing kharif season (up 0.4% YoY) supported by remunerative corn prices (up 7% YoY to Rs2,295/quintal as on July’23). High cost inventory provisions in CP segment likely to have dent the gross margins (down 580bps YoY) to 42.7%. However, lower employee cost coupled with lower opex down 220bps and 430bps YoY has resulted into EBITDA margin expansion of 70bps YoY to 24.4% (Ple 22.8%). We currently have Accumulate rating on the stock with TP of Rs4,720 based on 25xMarch25 EPS.