Buy Godrej Agrovet: target of Rs 855: ICICI Securities

Moneycontrol • 2 days ago

Original source

Key Investment Pillars

  • Godrej Agrovet's animal feed business is driving growth, with a 14% YoY revenue increase and 32% YoY EBIT growth, supported by higher realisations, volume growth, and a favourable product mix.
  • The company's palm oil business is expected to deliver healthy double-digit EBITDA CAGR, driven by plantation maturity, volume growth, and downstream integration.
  • Crop protection remains under pressure due to the El Niño impact, but management is focused on diversification and introducing new products to reduce dependence on cotton and chilli.
  • The dairy business is facing margin pressure due to elevated milk procurement costs, but the company is shifting its focus towards value-added products and consumer-led growth.

Thesis Validation Checklist

  • Investors should watch for signs of improvement in crop protection demand and the success of new product launches.
  • The growth of the palm oil business, particularly the contribution from the PKO derivatives plant, will be crucial.
  • Margin expansion in the animal feed segment and the ability to maintain profitability in the dairy business will be key.
  • Progress in the B2C transformation of Godrej Foods and the performance of the ACI Godrej Bangladesh JV will also be important indicators of the company's growth potential.