📌 At a Glance (Excerpt)
Godrej Agrovet has spent five years trying to become India’s most diversified agri-animal-food-energy conglomerate… but ended up being the FMCG version of a buffet thali — lots of variety, uneven taste. With low sales CAGR, margin volatility, and a recent dairy stake consolidation, is this stock ready to cream the market or just curdle at ₹744?
1️⃣ Flashback to FY20: The Animal Feed Empire Begins
Once upon a time, Godrej Agrovet was the quiet compounder in the Godrej family. No flashy FMCG soaps. No posh real estate. Just good ol’ animal feed, palm oil plantations, dairy, and crop protection chemicals.
Back in FY20:
- 🐓 Animal Feed was the biggest revenue chunk (~50%)
- 🥛 Creamline Dairy was still a JV
- 🌴 Palm Oil biz was underappreciated
- 🚜 Agrochemicals had seasonal spurts
- 📉 Market didn’t care: stock flat-lined after IPO
Basically, a “boring is good” agri-business… until India’s dairy wars, palm oil bans, and El Niño took over.
2️⃣ 5-Year Financials: Moo-dy Performance at Best
Let’s milk the numbers:
| 🧾 Metric | FY20 | FY25 | 5-Yr CAGR |
|---|---|---|---|
| Revenue (₹ Cr) | 6,964 | 9,383 | 6.14% |
| EBITDA (₹ Cr) | 489 | 816 | 10.8% |
| Net Profit (₹ Cr) | 301 | 403 | 6.0% |
| EPS (₹) | 15.94 | 22.35 | 6.8% |
| ROCE (%) | 15% | 16% | Flat-ish |
| Net Debt (₹ Cr) | 651 | 1,396 | 😬 2x up |
| OPM (%) | 7% | 9% | Finally decent again |
📉 Growth Verdict?
Low single-digit topline growth. Margins fluctuated. Dairy pulled down profits in FY23. Net profit only started recovering in FY24-25.
It’s like feeding the cow premium grains, but still getting average milk yield.
3️⃣ Segment Report Card: One Star, Three Passes, One Surprise
🐄 Animal Feed (47% of H1 FY25 Revenue)
- 🐟 Covers cattle, poultry, fish & shrimp
- 💹 Grew 15% over 3 years — volume led
- 💸 Margins thin but steady
📊 Rating: Reliable but commoditized. Feeds others, doesn’t fatten own EPS.
🌴 Oil Palm (Emerging Star)
- Operates 67,000 hectares under cultivation
- 🔥 High-margin segment (~20% EBITDA)
- Beneficiary of import duty hikes and Indonesia bans
- Govt incentives = bonus ghee
📊 Rating: Dark horse. Quietly becoming a margin engine.
🧫 Crop Protection
- Through subsidiary Astec LifeSciences
- Strong IP and formulation biz
- FY23-24 was volatile due to global agchem destocking
📊 Rating: Under pressure, but long-term potential solid. Needs global tailwinds.
🥛 Dairy (Creamline, now 99.3% owned)
- Acquisition of 47.38% stake in May 2025
- FY23 saw major losses, turnaround started FY25
- Consolidated play to challenge heritage players
📊 Rating: Painful consolidation. High capex, low margin – needs patience.
🐔 Poultry & Processed Foods (via Godrej Tyson)
- Minor contributor, contributes more to inflation jokes than earnings
- Goodwill play on ready-to-eat & frozen segments
📊 Rating: Optional garnish in the thali.
4️⃣ Recent Moves: Turning Butter into Ghee?
🔸 Creamline buyout: Now full control. No more JV drama. Also means full risk of dairy volatility.
🔸 Astec’s restructuring: Trying to build vertical integration between basic and advanced agri chems.
🔸 Capex Plans: Investment into oil palm expansion, agri R&D labs, and automation in animal feed.
🔸 Dividend payout: ~50%, proving they’re not hoarding for nothing.
🔸 Promoter stake down from 74% to 67.5% – no explanation, no buyback, just vibes.
5️⃣ Valuation: High Feed Cost for Low Yield?
📦 Current Metrics:
- Price: ₹744
- P/E: 35.6x
- P/B: 6.0x
- ROE: 16.5%
- Dividend yield: 1.34%
Compared to peers:
| Company | P/E | ROCE | Comments |
|---|---|---|---|
| Godrej Agrovet | 35.6 | 16.5% | Pricey for the growth |
| Avanti Feeds | 19.3 | 25% | Shrimp king |
| KSE Ltd | 8.0 | 43% | Underrated feed master |
| Mukka Proteins | 19.4 | 11.6% | Small cap, high growth |
🤔 Fair Value Range:
We assume a fair P/E of 25x FY26 EPS of ₹25, giving:
- FV = 25 × ₹25 = ₹625
- With optimism and palm oil kicker = ₹25 × 30 = ₹750
🎯 EduInvesting FV Range: ₹625–₹750
Not a bargain. You’re paying for future milk you haven’t yet seen.
6️⃣ Risks & Raita
- 🧀 Dairy drag: Needs scale + price hikes to be accretive
- 🐥 Volatile input prices: Soya, maize, milk – global commodities roulette
- 💧 Climate vagaries: Palm oil yield + crop protection biz is rain-dependent
- 🏦 High working capital: Inventory days ~66; rising debt
7️⃣ Final Moo: Should You Bite This Biscuit?
Godrej Agrovet is like a thali with one great sabzi (oil palm), a bland daal (animal feed), a curd that might go bad (dairy), and a pickle you’re not sure of (Astec). The brand is strong, balance sheet is decent, but growth consistency is missing.
If the dairy business finally turns profitable and Astec recovers, this could get back into investor favour. But right now, at 35x earnings, it’s not a low-hanging mango.
✍️ Written by Prashant | 📅 June 20, 2025
Tags: Godrej Agrovet, agri stocks, animal feed, palm oil, Godrej Group, dairy consolidation, undervalued FMCG, EduInvesting Recap, Nifty 500
