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ICICI Securities Report
Godrej Agrovet Ltd. has reported healthy 13.5% YoY revenue growth in Q2 FY23, fuelled by growth across segments. However, margins remained stressed as all segments reported margin contraction YoY.
While margin in crop protection segment was impacted by input material inflation and unfavorable product mix, dairy segment's profitability was dented due to higher procurement cost and low price hikes.
We believe the company has likely gained market shares across segments.
We model Godrej Agrovet to report revenue and profit after tax compound annual growth rates of 20.7% and 12%, 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 Q2 FY23.
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