Rs 105/Share Dividend: Ahead Of Ex-Dividend, 65-Year Old Agri Firm Hits 52-Week High; PL Sets TP of Rs 5,920

Incorportaed in 1958, Bayer CropScience is among leading manufacturer of pesticides and agrochemicals. This agri stock touched a new 52-week high ahead of turning ex-dividend on Thursday for a dividend payout of whopping Rs 105 per share. Prabhudas Lilladher has recommended buying for a target price of Rs 5,920.

On November 15, Bayer Cropscience shares ended at Rs 5,569.90 apiece, which climbed by Rs 80.30 or 1.46% on BSE with market cap of Rs 25,032.30 crore. The midcap stock touched a new 52-week high of Rs 5,619.00 during the trading hours of the day.

Bayer Cropscience revised its record date for the interim dividend of Rs 105 per share to Novemebr 16 from earlier November 11. The dividends will be paid on a face value of Rs 10 each. In percentage term, the payout is about 1050% for FY24.

The company plans to pay the dividend by November 30, 2023. At the current market price, its dividend yield is at 2.34%.

In FY23 alone, Bayer paid a total dividend of Rs 1300% amounting to Rs 130 per share.

For Q2 ended September 30, 2023, Bayer CropScience registered Revenue from Operations of Rs 16,172 million as compared to Rs 14,519 million in the corresponding period of FY 2022-23. Profit Before Tax stood at Rs 3,057 million, compared to Rs 2,290 million in the corresponding period of the previous financial year.

Meanwhile, in H1FY24, the company reported revenue of Rs 33,568 million compared to Rs 31,193 million for the corresponding period in FY 2022-23. Profit Before Tax for the H1 ended September 30, 2023 stood at Rs 7,118 million, compared to Rs 6,113 million for the corresponding period in FY 2022-23.

Post Q2 results, Simon Britsch, Chief Financial Officer, BCSL said, "A strong operating expense steering and sustained focus on maintaining optimal channel inventory, combined with consistent portfolio performance, especially in corn seeds and crop protection, have yielded us a Profit Before Tax growth of 16%. We will continue with sustained growth investments of which digitalization is a key pillar. Our drone spray service under this umbrella spans 6 states in the country currently."

In its research note dated November 3rd, Prabhudas Lilladher said, "We broadly keep our FY24/25E/26E estimates unchanged. BYRCS reported decent set of numbers with revenue growth (up 11% YoY) largely driven by strong CP sales given Laudis, Nativo and Council actively performing well and volume growth in Roundup and corn hybrid seeds offsetting lower prices."

PL's note added, "We believe strong growth in corn hybrid seeds was largely led by better maize acreages during kharif season (up 4.0% YoY as on 3rd Oct-23) supported by remunerative corn prices (up 7% YoY to Rs2,339/quintal as on Oct'23). High cost inventory provisions in CP segment likely to dent gross margins (down 180bps YoY) to 37.6%."

However, it also said, " lower employee cost coupled with lower opex down 270bps and 160bps YoY has resulted in EBITDA margin expansion of 250bps YoY to 18.9% (Ple 18.5%). We expect Revenue/ EBITDA/PAT CAGR of 10%/13%/13% over FY24-26E (FY18-23 CAGR of 14%/17%/18%)."

"Maintain 'Accumulate' rating on the stock with revised TP of Rs5,920 (Rs4,720 earlier) based on 28xFY26 EPS," PL's note added.

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