Godrej Agrovet Ltd. share price target

GOAGRO reported weak results as cost pressure impacted margins. Topline growth of 28% was inline, driven by 34%/84% growth in Animal Feed/ Palm Oil segment. Blended gross margins contracted by 302 bps, driven by lower than expected margins in all segments. Price hikes in respective segments were not enough to offset cost inflation. Volume growth was healthy in Animal Feed but sharply lower than expected in Palm oil (@ 2% v/s exp of 11%), due to few weeks' delay in the season. Realisation growth was better...

In this note, we have analyzed the recent trends in palm oil prices, the parameters driving these prices, and the corresponding impact on the Palm Oil business of GOAGRO the revenue/EBITDA contribution for which stood at 12%/17% (as of FY21). Here are the key highlights:...

We roll forward to FY23 estimates and upgrade GOAGRO to BUY (from Accumulate) with SoTP (Exhibit 1) based target price of Rs 639 (previous 587). The company reported better than expected results driven by higher than anticipated margins in Animal Feed (@7.1% v/s PLe of 4.9%) and Crop protection (@20.3% v/s PLe of 18.6%) segment. Animal feed volumes were impacted by bird flu in Q4, but margins expanded by >300 bps due to commercialisation of R&D; initiatives. Increased sale of in-house products (up...

GOAGRO's strong 4QFY21 performance was aided by all segments and low base of 4QFY20. EBITDA margin expanded 440bp YoY due to lower raw material costs (-340bp YoY), which led to an EBITDA growth of 133%. All...

We maintain reduce rating (TP- Rs 676) on CRIN due to capacity constraints in NPK and likely headwinds on the raw material side starting 4Q. We are positive on Urea companies given healthy volumes and significantly lower...

GOAGRO reported lower than expected results driven by subdued performance from Animal feed & Palm oil segment. Animal feed demand remains impacted by slowdown in out-of-home consumption of dairy products and animal protein. Similarly, in palm oil segment, processing volumes took a big hit due to lower arrivals of Fresh Fruit Bunches (FFB) given white fly attack in AP & TG. While GOAGRO is getting its mojo back by (a) margin expansion across key segments (b) expected volume build up in...

GOAGRO's 3QFY21 revenue decreased by 14% YoY due to a 23%/17%/10% decline in the Animal Feed (AF)/Palm Oil/Dairy segment. However, EBITDA margin expanded due to lower raw material costs, which led to 12% EBITDA growth. Margin expansion was witnessed in AF and Processed Foods and Dairy, but contracted in Palm Oil and Crop Protection (CP). Factoring in the below expected performance during 3QFY21 (mainly due to Palm Oil, AF, and CP), we decrease our FY21E PAT estimate by 7%. We have maintained the same for FY22E/FY23E as performance in 3QFY21 was...

Production disruption caused by the extended lockdown resulted in lower-than-expected sales volume of higher-margin specialty 45%/302% due to strong volumes and higher realizations in the enterprise declined 26% YoY and stood at INR2.4b with EBIT margin contracting 70bp to 1.4%. GOAGRO's CP business is expected to be on strong footing due to (a) product launches in the standalone CP segment, (b) strong performance in Astec owing to its expertise in triazole chemistry, and (c) commencement of a new herbicide In the AF segment, increase in chicken/milk prices should improve farm profitability, thereby driving demand for broiler/cattle feed. Crop protection segments performance was impacted as the company took a conscious call to reduce the receivable for The company launched new herbicides during the quarter Delete Aqua and Production disruption caused by the extended lockdown resulted in lower-than- expected sales volumes of higher margin specialty products.

Domestic agrochemical industry is expected to grow +20% YoY in Q1 driven by massive surge in herbicide sales, pre-buying led by robust demand expectation and ~5% price increase in generic molecules. Geographically, North India followed by South is expected to drive growth. Also, crop wise Rice will be the single largest growth driver for the industry driven by acreage expansion and shift from transplanting rice to Direct Seeded Rice (DSR). Molecules like Bispyribac Sodium (Key player PI Ind- Nominee Gold), Pyrazosulfuron (UPL- Saathi, Dhanuka- Cempa) Pendimethalin (UPL- Dost...

GOAGRO's results were significantly impacted due to COVID and lockdown measures leading to significant erosion in topline and profitability in the core business. Many one-offs and adjustments have impacted YoY comparison, but indicatively adjusted sales/EBITDA/APAT came at +2%/-5%/+38% YoY @ Rs 14.6 bn/ Rs 648 mn/ Rs 272 mn resp. Though its products fall under essential categories list the outlook continues to be grim for a while, as many...