The stock has corrected 25% from its 52-week high of Rs 608 in November last year. The shares are down 11% this year.
To buy to sell Godrej Agrovet to share
Shares of Godrej Agrovet Ltd., India’s largest producer of crude palm oil and the country’s leading animal feed player, are back at their IPO price of Rs 460. hit an intraday low of Rs 464.90 on Wednesday. The stock has corrected 25% from its 52-week high of Rs 608 in November last year. The shares are down 11% this year.
Godrej Agrovet is India’s leading compound feed player, active in livestock feed, poultry feed and aquatic feed. It is also the leading animal player in Bangladesh through a 50/50 joint venture with ACI Godrej. It is also the largest producer of crude palm oil in India, with a market share of almost 30%.
The company is into crop protection through a majority stake in Astec LifeSciences, dairy, poultry and processed foods through a 51/49 joint venture with Tyson India Holdings.
Godrej Agrovet’s animal feed business is the largest business segment, contributing nearly half of overall revenue. According to its annual report, a bag of animal feed is sold every second. It has over 30 manufacturing plants in India for this business.
For the September quarter, Godrej Agrovet’s core animal feed business grew 7.6%, the weakest in the last six quarters. The first five quarters recorded growth of between 25% and 50%.
A slowing core business means the company’s overall revenue also grew just 4% year-over-year, which is also the slowest since the March quarter of the year. fiscal year 2021.
Godrej Agrovet Managing Director and CEO Balram Singh Yadav highlighted on their earnings call last week what has plagued the feed industry this time around. He referred to Bangladesh, where the company is number two in the animal feed sector. The problems started there when the government imposed price controls on poultry feed.
“Unfortunately, poultry feed was the most profitable product. But in the first half of the year, it became a loss-making product. It hurt us a lot in Bangladesh,” he said on the conference call.
However, Yadav also mentioned that with falling costs, profitability returned to the business in October and is expected to strengthen going forward.
Another geography the CEO and CEO referred to was Andhra Pradesh, where the government imposed price controls on aquatic feed and fish feed. “(This) is not from an inflation control point of view, but purely political,” he said.
Following its quarterly results, brokerage firm Motilal Oswal maintained its buy rating on Godrej Agrovet with a price target of Rs 580, which is still well below the peak of over Rs 700 the stock has seen. in April 2018.
The brokerage expects Godrej Agrovet’s consumer protection business to do well, thanks to product launches and better performance from Astec Lifesciences. It also expects the animal feed sector to capture a higher market share through its new product launches.
First post: STI