Kaveri Seed – One of many predominant beneficiaries of the rise in cotton costs: ICICI Securities
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Crude oil costs are up 26% year-on-year, which is able to doubtless result in larger costs for nylon, a significant aggressive cotton product.
We be aware that cotton costs (wholesale worth index) additionally rose to 114 in February 2021 from 92 in October 2020.
Rising cotton costs will stimulate cotton planting. Kaveri Seed Firm Ltd. generates round 50% of its earnings from cottonseeds and is due to this fact prone to be one of many predominant beneficiaries of rising cotton costs.
The rise in cottonseed earnings can also be a rise in margins.
We stay optimistic on the corporate given the success of its non-cotton seeds and market share good points in cotton seeds in Gujarat and Haryana, amongst different states.
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