Mehabe score: 4 G Factor: 3 Piotski Score: 3 The stock has a rating OBSERVE & HOLD. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 3 and Piotski score of 3.
Description
Godrej Agrovet Limited is a diversified, Research & Development focused agri-business company, dedicated to improving the productivity of Indian farmers by innovating products and services that sustainably increase crop and livestock yields. It holds leading market positions in the different businesses in which it operates – Animal Feed, Crop Protection, Oil Palm, Dairy and Poultry and Processed Foods.
Main Points
Animal Feed Business (46% of revenues) #
It is the main business of the company and it enjoys a dominant position in the domestic organised animal feed industry. It is present across various sub-categories like cattle, broiler, layer and aqua feed. # It owns 32 state-of-the-art manufacturing plants, equipped with quality assurance labs, help farmers improve their farm productivity and profitability.
It also has a presence in the animal feed industry in Bangladesh through its joint venture ACI Godrej Agrovet Pvt LtdSite:GODREJAGROMain Symbol:GODREJAGRO
Stock trades at 655.0, above its 50dma 593.86. It also trades above its 200dma 534.5. The stock remains bullish on techicals
The 52 week high is at 674.40 and the 52week low is at 440.25
Price Chart
P/E Chart
Sales and Margin
Strengths
– has been maintaining a healthy dividend payout of 36.58%
Weakness
– The company has delivered a poor sales growth of 10.81% over past five years.
– might be capitalizing the interest cost
Competition
– The industry trades at a mean P/E of 28.1x. Unique Organics trades at the industry’s max P/E of 172.6x. GODREJAGRO trades at a P/E of 40.1x
– Industry’s mean G-Factor is 3.6 while the mean Piotski score is 7.0. GODREJAGRO has a G-Factor of 3 and Piotski scoreof 3.
– Average 1 month return for industry is 28.1%. The max 1- month return was given by Tanvi Foods: a return of 112.88 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 1462.0 cr compared to Rs 1628.0 cr for period ended Mar 2020, a fall of 10.2%
Operating Profits reported at Rs 112.0 cr for period ended Mar 2021 vis-vis 126.0 for period ended Mar 2020 .
Operating Margins contracted -7.9 bps for period ended Mar 2021 vis-vis Mar 2020 .
The EPS for Mar 2021 was Rs 2.95 compared to Rs 3.21 for previous quarter ended Dec 2020 and Rs 3.88 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 6267.0 cr for period ended Mar 2021 vis-vis sales of Rs 6964.0 cr for the period ended Mar 2020, a fall of 11.1%. The 3 year sales cagr stood at 6.5%.
Operating margins expanded to 9.0% for period ended Mar 2021 vis-vis 7.0% for period ended Mar 2020, expansion of 200.0 bps.
Net Profit reported at Rs 314.0 cr for period ended Mar 2021 vis-vis sales of Rs 306.0 cr for the period ended Mar 2020, rising 2.5%.
Company recorded a healthy Net Profit CAGR of 11.1% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has had stable/constant Return on Equity (RoE) metric. The RoE on Last Year basis was 16.0% compared to 17.0% over the last 3 Years. – The stock has given a return of 46% on a 1 Year basis vis-vis a return of 3% over the last 3 Years. – The compounded sales growth on a TTM bassis is -10% vis-vis a compounded sales growth of 7% over the last 3 Years. – The compounded profit growth on a TTM basis is 2% vis-vis a compounded profit growth of 12% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Mar 2021 fii holding stood at 2.83% vis-vis 3.14% for Dec 2020 – Public shareholding has remained largely constant. The Mar 2021 public holding stood at 24.8% vis-vis 24.37% for Dec 2020
Conclusion
– has been maintaining a healthy dividend payout of 36.58% – The company has delivered a poor sales growth of 10.81% over past five years.
– might be capitalizing the interest cost
Fundamentally, the stock remains weak on business fundamentals. Weak near term results have dampened and questioned business drivers. We suggest to wait for a upturn in business performance.
Technically, the stock trades above its 50 DMA 593.86 and is trading at 655.0 It has shown near term bullish momentum contrary to business fundamentals. We suggest to observe price action. However as investors, who like to avoid timing the markets, we suggest to avoid the stock
