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for Industry - Diversified
Prevailing holdco discount at 55%, two-year average at ~45% Godrej Industries derives its primarily value from its holding in other group companies. Its share of holding as of date (November 2019) has a market value of ~| 33,000 crore vs. its prevalent market capitalisation of ~| 15,000 crore, thereby implying a holding company discount of ~55%. In the past two years, we have seen this holding company discount averaging at ~45%, providing us hope of prevalent discounts converging towards their mean. Exhibit 1: Holding company discount trend...
Chemical segment revenues jumped 51% yoy to Rs 5.8bn led by higher volumes (+34% yoy) and firm realizations (45% yoy) and was above our est of Rs 5.0bn. Company reported highest ever quarterly EBIT margins at 42% (+1800bps yoy and 500bps qoq). Sugar segment revenues increased to Rs4.3bn (+15% yoy) but was below our estimate of Rs4.9bn. Sugar segment profits dropped by 45% yoy to Rs488bn due to softness in sugar...
Our thesis on Godrej Industries (GIL) is finally playing out as investors are now (a) assigning a lower holdco discount and(b) highervalue to Godrej Agrovet (GAVL).
