Bayer CropScience - Weak Start To FY25, Near-Term Pressure In Seeds; Maintaining A Buy: Anand Rathi

Anand Rathi Report

Less than our estimate and the consensus, Bayer CropScience Ltd. reported a weak Q1, with revenue/Ebitda/profit after tax declining 6%/26%/23% YoY. Despite consolidated revenue dropping 6% YoY, agrochemical volumes grew 3% YoY.

Amid hurdles posed by the weather and unfavorable market dynamics at the start of the season, the dip in revenue was due to-

1. proactive channel management, coupled with sales shifting toward Q2 FY25 (consumption period), which in turn lowered agrochemical revenue growth.

2. Sales of corn hybrid seeds were hit in Q1 (the heaviest quarter for seeds), owing to supply constraints and higher cost of seeds denting revenue growth and margins.

This, and the inferior operating leverage led to the Ebitda margin falling 510 basis points yoy to 19.2%.

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