Buy Godrej Agrovet; target of Rs 840: Motilal Oswal

Motilal Oswal's research report on Godrej Agrovet

Godrej Agrovet (GOAGRO) reported a subdued operating performance (EBIT marginally down 2% YoY) in 4QFY25, primarily due to a sharp 68%/ 66% YoY decline in Dairy/Poultry EBIT, while Animal Feed (AF)/Crop Protection (CP) EBIT dipped ~4%/2% YoY. These were partly offset by Palm Oil EBIT, which doubled YoY, fueled by higher realization. Revenue remained flat YoY mainly due to a significant decline in AF/ Poultry business revenue (volume-led decline), offset by higher revenue in Palm Oil (realization-led growth). Management has guided to achieve a revenue growth of ~16-18% in FY26, led by CP, AF, and Astec. Similar growth in EBITDA is anticipated, largely led by lower losses in the Astec business and improving margins in Palm Oil.

Outlook

However, we factor in lower-than-expected performance in 4QFY25 and reduce our FY26E EBITDA by 8%, while largely maintaining our FY27E EBITDA. We reiterate our BUY rating on the stock with an SOTP-based TP of INR840.

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