KSE Ltd – Value Buy Coverage
Price: Rs. 224 | M.Cap: Rs. 717 Cr | P/E: 5.8
KSE Ltd is a deep-value regional FMCG and agri-linked company operating in cattle feed, edible oil extraction and dairy products. Despite short-term earnings pressure, the stock trades at a sharp discount to sector valuations with strong dividend yield and long-term profitability track record.
Business Overview
Incorporated in 1963, KSE Ltd manufactures ready mixed cattle feed, solvent-extracted oils and dairy products including milk and ice cream brands like Vesta. The company operates through Animal Feed, Oil Cake Processing and Dairy divisions with an extensive dealer network across South India.
Key Segments
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Cattle Feed Manufacturing
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Oil Cake Processing & Edible Oils
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Dairy Products (Milk, Ghee, Ice Cream)
The diversified agri-FMCG model provides steady cash flow but exposes earnings to commodity price cycles.
Quarterly Performance Snapshot
| YOY | Dec 2025 | Sep 2025 | Dec 2024 |
|---|---|---|---|
| Sales (Rs. Cr) | 428 | 427 | 412 |
| EBITDA (Rs. Cr) | 22.2 | 42.9 | 28.3 |
| Net Profit (Rs. Cr) | 16.4 | 32.9 | 21.0 |
| EPS (Rs.) | 5.11 | 10.27 | 6.57 |
Performance Insight
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Sales growth remains modest at ~4%, reflecting mature business dynamics.
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Profit and EBITDA declined sequentially due to margin compression and commodity cost impact.
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Despite quarterly softness, long-term profitability trend remains intact.
Valuation Snapshot
| Parameter | Value |
|---|---|
| Price | Rs. 224 |
| Market Cap | Rs. 717 Cr |
| P/E | 5.8 |
| Dividend Yield | 3.58% |
| Book Value | ~Rs. 110 |
| ROE | ~30%+ |
| ROCE | ~38–42% |
KSE trades at a steep discount compared to broader FMCG peers, where sector P/E is significantly higher.
Pros (Investment Positives)
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Company has reduced debt and maintains a strong balance sheet.
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Attractive dividend yield around 3.5% provides downside comfort.
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Profit CAGR of ~36% over last five years indicates long-term earnings capability.
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Leadership in regional cattle feed segment with diversified revenue streams.
Key Risks / Monitorables
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Margin pressure due to volatility in agricultural input prices.
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Low promoter holding (~22-23%) may limit market confidence.
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Sales growth remains moderate compared to high-growth FMCG peers.
Chanakya Value Buy View
KSE Ltd represents a classic value stock — strong return ratios, consistent dividends and diversified agri-FMCG presence trading at a low P/E multiple. Recent quarterly earnings decline appears cyclical rather than structural.
With ROE above 30% and debt under control, valuation comfort exists near current levels, making it suitable for investors seeking steady cash-flow businesses with dividend yield rather than high-growth stories.
Strategy Outlook
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Ideal for value investors accumulating gradually.
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Upside may emerge if margins stabilise and dairy or feed volumes improve.
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Suitable for medium-term holding with focus on income + re-rating potential.
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