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ICICI Securities Report
Godrej Agrovet Ltd.'s profitability faced turbulence due to steep decline in animal feed (49.6% of Q1 FY23 revenues) margins; sharp correction in soya bean prices while the company was holding high cost inventory resulted in the animal feeds' Ebit to decline 61.6% YoY.
However, on the revenue front, growth remained strong across segments (ex-crop protection).
The company has also gained market shares across sub-segments such as broiler feed, shrimp feed, cattle feed and dairy.
We model Godrej Agrovet to report revenue and profit after tax compound annual growth rate of 21.1% and 16%, respectively, over FY22-24E, and remain confident of value creation (return on equity more than cost of equity). We cut our earnings estimates to factor in the lower profitability of the company in Q1 FY23.
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