Buy Godrej Agrovet; target of Rs 935: ICICI Securities

ICICI Securities's research report on Godrej Agrovet

Godrej Agrovet (GOAGRO) reported muted EBITDA/PAT of INR 2.1/0.9bn in Q2. EBITDA/PAT fell 4/10% YoY, with a sharply weaker performance in both standalone crop protection and Astec Lifesciences, offsetting the resilience seen in animal feed and strong performance in vegetable oil segment. The long tail of monsoon narrowed the application window for GOAGRO products, while some CDMO clients pushed their delivery timelines to H2, impacting crop protection and Astec. H2 is likely to see stronger trends, with continued strength in animal feed/vegetable oil, recovery seen in Astec and relatively better application window seen for crop protection. Maintain BUY with a revised TP of INR 935, lowering the EPS by 2.3/5.3% for FY27E/28E, respectively.

Outlook

We expect robust 21% EPS growth and significant improvements in RoE and ROCE through FY28E, which are not fully reflected in current valuations. Our SoTP valuation suggests a target price of INR 935, indicating ~51% upside from CMP. We maintain our BUY rating on the stock.