Godrej Agrovet Share Price Today: Godrej Agrovet shares surged nearly 9% in early trade on Tuesday after Kotak Institutional Equities highlighted the company's oil palm business as a potential hidden gem and raised its fair value to Rs 1,010, reflecting an upside of 64.12% from previous close of Rs 615.40.
Godrej Agrovet shares rose as much as 8.87% to Rs 670 on the BSE. At 9:21 am, the stock was trading 3.80% higher at Rs 638.80, while the BSE Sensex was largely flat with a negative bias at around 76,880.
The sharp move came after Kotak Institutional Equities analysts Abhijit Akella and Chaitanya Sawhney raised the fair value to Rs 1,010, from Rs 850, while also retaining the 'Buy' rating on the stock.
Godrej Agrovet Oil Palm Business: ‘Hidden Gem'
Kotak said Godrej Agrovet's oil palm business could become a major value driver for the company. The segment clocked Rs 4.3 billion in EBITDA in FY26 and is expected to conservatively exceed Rs 10 billion by FY31, driven by double-digit growth in fresh fruit bunch (FFB) volumes and a rising contribution from value-added products.
The brokerage believes the segment's long growth runway, stable margins and high return on capital employed (RoCE) warrant attractive valuations. In its assessment, the oil palm business alone could potentially be worth more than Godrej Agrovet's current market capitalisation.
Oil Palm Expansion Offers Long Growth Runway
India's National Mission on Edible Oils-Oil Palm (NMEO-OP) targets increasing the country's oil palm area to 2.8 million hectares, compared with around 0.6 million hectares currently.
Kotak noted that India has a sizeable palm oil import bill of around $10 billion annually, while domestic production remains negligible at around 0.5 million tonnes per annum against consumption of 7-8 million tonnes.
Industry-wide area additions accelerated to 84,000 hectares in FY26, compared with 21,000 hectares in FY22. This gives Godrej Agrovet confidence that its own oil palm area could nearly double to 150,000 hectares by 2031, from around 80,000 hectares currently.
The company has an existing allotment of more than 230,000 hectares, providing a substantial runway for future growth.
Margins Could Improve Further
Kotak said the oil palm segment's EBITDA margins have remained within a 15-23% range during FY13-26, supported by a government-set formula linking farmer payments for FFBs to palm oil prices.
More than 90% of Godrej Agrovet's FFB purchases currently come from Andhra Pradesh, which follows a different pricing formula. However, more than 80% of new area additions are now coming from states outside Andhra Pradesh, potentially improving the business mix.
Operating leverage, higher oil extraction ratios from high-yielding varieties and a shift towards value-added products could further support margins. Kotak estimates value-added products such as cocoa butter substitutes alone could add 300 basis points or more to margins.
Rs 1,010 Fair Value
Management expects the oil palm business to generate Rs 45 billion in revenue by FY31, with EBITDA margins of more than 23%, even under a conservative scenario.
Kotak raised its target EV/EBITDA multiple for the segment to 18x from 15x, while its DCF-based assessment suggests a fair multiple closer to 20x.
Consequently, the brokerage has raised its September 2027E SoTP-based fair value for Godrej Agrovet to Rs 1,010 from Rs 850, while retaining its 'Buy' rating.
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