Agrochemical maker gets a corn seed boost, weathers adverse climate; time to add to your portfolio?
Drug and pesticide maker Bayer Cropscience — a subsidiary of Germany’s Bayer AG — reported a strong set of results for the quarter ended June 30 driven by robust volumes in its corn seeds unit. But analysts are divided whether a rally in the stock — following the earnings announcement — will continue amid persistent weather-related challenges in the near term.
Bayer Cropscience results: A summary
Bayer Cropscience reported 8.6 per cent year-on-year growth in net profit to Rs 328.5 crore for the first quarter of the current financial year while its revenue expanded 4.3 per cent to Rs 1,739.6 crore. The company’s cost of material consumed stood at Rs 896.7 crore as against Rs 875.9 crore for the corresponding quarter a year ago, according to a regulatory filing.
The company said it continued to manage costs proactively and to invest in targeted growth opportunities, boosting its profit before tax, which expanded to Rs 406.1 crore from Rs 382.3 crore a year ago. The company clocked strong growth in sales and liquidation of its crop protection portfolio despite the impact of delayed monsoon, according to a statement.
Bayer Cropscience said corn seeds continued to yield strong results with volume growth driven by portfolio and better acreages in the kharif season. The company’s EBITDA margin — a key measure of profitability — improved by 70 basis points to 24.4 per cent.
The earnings report powered a spike in the Bayer Cropscience stock, which rose by Rs 266.3 — or 5.8 per cent — to settle at Rs 4,858.1 apiece on BSE.
Can Bayer Cropscience shares sustain the rally?
“The stock staged a strong move on Tuesday probably because finally there are some positive results coming in from the sector… Most agro-chemicals stocks have been under-owned in the recent past but it is highly doubtful if such a rally will continue in Bayer,” AK Prabhakar, Head of Research at IDBI Capital Markets, told Zeebiz.com.
Here’s how Bayer Cropscience and some of its peers have fared in the past few weeks:
