Motilal Oswal has given Buy recommendation for Godrej Agrovet recommended buy rating on the stock with a target price of Rs 692 in its research with a target price of Rs. 692 in its research report issued on Mar 16, 2022

Motilal Oswal’s research report on Godrej Agrovet

The palm oil prices rallied 42% YoY to USD1,383/t as of Jan’22. However, the prices have further seen a 32% upsurge reaching USD1,840/t on 14th Mar’22 from USD1,393/t on 16th Feb’22. The spike was led by ongoing Russia-Ukraine conflict and the export restrictions imposed by the Indonesian government. Moreover, palm oil prices are likely to remain elevated until the global commodity supply issues cool down. The AF business is witnessing increasing demand from the hotels, restaurants, and catering (HoReCa) segment as a result of opening up of the economy. FY22 sales volume is estimated to surpass the pre-COVID level. The CP business is likely to do well going forward, due to: a) product launches in the standalone business (over the next 1-2 years), b) correction in RM prices, with an improvement in logistics operations in FY23 and FY24, c) better performance of Astec Lifesciences owing to its expertise in triazole chemistry, and d) commencement of a new herbicide plant. We expect GOAGRO to report a revenue/EBITDA/PAT CAGR of 16%/15%/21% over FY21-24, respectively.

Outlook

We raise our FY23/FY24 earnings estimates by 11%/3%, respectively, backed by favorable palm oil business environment and improvement in EBITDA margin of the standalone CP business from 22% each in FY23E/FY24E to 23%/24% respectively (v/s 27.7% in FY21 and 19.8% in FY22E). We value the stock on an SoTP basis to arrive at our TP of INR692, implying 46% potential upside. We maintain our BUY rating on GOAGRO.

More Info

At 11:11 hrs Godrej Agrovet was quoting at Rs 478.95, up Rs 4.10, or 0.86 percent.

It has touched an intraday high of Rs 482.70 and an intraday low of Rs 477.30.

It was trading with volumes of 6,191 shares, compared to its thirty day average of 17,567 shares, a decrease of -64.76 percent.

In the previous trading session, the share closed down 0.34 percent or Rs 1.60 at Rs 474.85.

The share touched its 52-week high Rs 746.80 and 52-week low Rs 458.00 on 04 August, 2021 and 28 February, 2022, respectively.

Currently, it is trading 35.87 percent below its 52-week high and 4.57 percent above its 52-week low.

Market capitalisation stands at Rs 9,201.25 crore.

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