Motilal Oswal Financial Services

12 May 2020

4QFY20 Results Update | Sector: Midcaps

Godrej Agrovet

Estimate change

TP change

Rating change

Bloomberg

Equity Shares (m)

M.Cap.(INRb)/(USDb)

52-Week Range (INR)

1, 6, 12 Rel. Per (%)

12M Avg Val (INR M)

Financials & Valuations (INR b)

Y/E Mar

2020 2021E

Sales

68.3

67.0

EBITDA

4.1

PAT

2.5

2.0

EBITDA (%)

6.0

6.1

EPS (INR)

13.2

10.5

EPS Gr. (%)

5.7 (20.4)

BV/Sh. (INR)

100

Ratios

Net D/E

0.3

RoE (%)

14.6

10.8

RoCE (%)

11.8

8.8

Payout (%)

41.5

62.8

Valuations

P/E (x)

29.1

36.6

EV/EBITDA (x)

20.4

20.6

Div Yield (%)

1.4

FCF Yield (%)

(0.3)

1.6

CMP: INR386

TP: INR443 (+15%)

COVID-19 dents performance across segments…

…barring Crop Protection and Palm Oil

GOAGRO IN



192

74.2 / 1

598 / 265

0/1/-6



Buy

Ex-Tyson Foods (absent in the base quarter) and sale of land, GOAGRO’s

revenue declined 1%. On the other hand, EBITDA increased 9%, aided by

performance in Crop Protection (CP) and Palm Oil, which was offset by

Animal Feed (AF) and Dairy.

Although quarterly performance was above our estimates, we maintain our

estimates for FY21/FY22 due to the current uncertain scenario.

Revenue improved 7% YoY to INR14.9b (v/s est. INR13.4b), largely

attributable to growth in CP, Dairy, and Godrej Tyson Foods (absent in the

base quarter). EBITDA margins contracted 220bp YoY to 3.2% (v/s est. 1.9%).

They were weighed by margin contraction in AF, Dairy, and Godrej Tyson

Foods, whereas they were offset by margin expansion in CP. However,

higher other income restricted PAT decline to 10%. FY20 revenue/PAT grew

15%/6%, while EBITDA declined 10%.

revenue remained flat YoY (at INR8.8b) on 11% decline in volumes, offset

by price hikes; volumes were impacted due to the disruption caused by the

COVID-19 outbreak, especially in the Broiler and Layer Feed segments. EBIT

margins decreased 150bp to 3.8% due to higher RM prices; EBIT/kg declined

19% YoY to INR1.13/kg (+13% QoQ).

Palm Oil

grew 5% YoY (to INR665m), with the EBIT margin expanding 660bp

(to 6.5%), primarily benefitting from high crude palm oil (CPO) prices.

surged 38% YoY (to INR2.5b), with the EBIT margin increasing 110bp (to

19.3%), driven by a robust performance from Astec.

Sales in standalone CP

grew 48% YoY (to INR670m), whereas EBIT declined 34% YoY.

Revenue/EBITDA for

Astec

grew 35%/66% on account of higher realization,

along with volume growth in key products.

Dairy

revenue grew 5% YoY to INR2.8b, with EBIT loss of INR58m v/s profit

of INR38m reported in 4QFY19. Margins were impacted due to an increase

in procurement cost.

Godrej Tyson Foods’

revenue de-grew 5% YoY (to INR1.1b). On the other

hand, it reported EBITDA loss of INR335m v/s profit of INR39m posted in

4QFY19. Performance was adversely impacted by false rumors of COVID-19

being linked to poultry, resulting in a plunge in the volumes and prices of

poultry and poultry products.

In the Palm Oil segment, volumes are not at risk as imports are likely to

decrease if demand starts to increase; however, price decline stands as a key

risk.

CWIP of INR1.5b as of FY20 pertains to: a) INR1.2b injected in the Animal

Feed segment and b) INR220m put toward the Astec herbicide plant, which

would commence operations in 3QFY21. Guided for consolidated capex of

INR2–2.5b for FY21.

AF, Dairy, and Godrej Tyson Foods drag down EBITDA performance

2022E

75.9

5.6

3.2

7.4

16.9

60.1

110

0.2

16.1

12.9

39.2

22.9

14.8

1.4

1.8



Shareholding pattern (%)

As On

Promoter

DII

FII

Others

Dec-19 Sep-19 Dec-18

69.1

69.0

68.8

3.7

2.2

2.9

3.4

23.9

3.4

25.4

3.0

25.3



FII Includes depository receipts



Highlights from management commentary



Research Analyst: Sumant Kumar

(Sumant.Kumar@MotilalOswal.com); +91 22 6129 1569

Darshit Shah

(Darshit.Shah@motilaloswal.com); +9122 6129 1546 /

Yusuf Inamdar

(yusuf.inamdar@motilaloswal.com); +91 22 7193 4239

Investors are advised to refer through important disclosures made at the last page of the Research Report.

Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.

Godrej Agrovet

Valuation and view



In the near term, COVID-19 is likely to impact GOAGRO’s performance across

segments, barring CP; however, performance is anticipated to improve once

normalcy has returned.

CP has largely aided quarterly performance, and the segment is likely to

continue to perform strongly. This would be supported by product launches in

standalone CP and robust results from Astec owing to its specialty in triazole

chemistry.

In AF, an increase in chicken/milk prices would improve farm profitability,

thereby driving demand for broiler / cattle feed; additionally, the company is

likely to benefit from lower RM prices.

Volume growth is likely to revive owing to the arrival of more FFB and corrective

steps undertaken by the company to prevent the pilferage of FFB to other mills.

Moreover, a new plant with improved technology would ensure higher yields

going forward.

We maintain our estimates and value the stock on an SOTP basis, arriving at a

target price of INR443. Maintain

Buy.

(INR m)

FY20 Var

4QE (%)

13,358 12

-0.6

13,107

251 92

1.9

380

143

-76

-26.5

Consolidated – Quarterly earnings model

Y/E March

Gross Sales

14,844

YoY Change (%)

8.8

Total Expenditure

13,451

EBITDA

1,393

Margins (%)

9.4

Depreciation

224

Interest

Other Income

PBT before EO expense

1,126

Extra-Ord expense

PBT

Tax

Rate (%)

Minority Interest & Profit/Loss

of Asso. Cos.

Reported PAT

Adj PAT

YoY Change (%)

Margins (%)

1,126

393

34.9

-69

802

8.7

5.4

FY19

15,884 14,541 13,909

11.4

19.1

16.4

14,477 13,531 13,160

1,407 1,010

749

8.9

6.9

5.4

237

264

257

338

107

1,423

696

524

-883

1,423

452

31.8

942

16.7

5.9

696

244

35.0

409

9.1

2.8

1,407

191

13.6

1,137

254

1.4

1.8

17,026

14.7

15,607

1,419

8.3

351

102

1,068

356

33.3

-48

760

-5.3

4.5

FY20

18,511 17,827 14,930

16.5

22.6

7.3

17,314 16,821 14,448

1,197 1,006

482

6.5

5.6

3.2

375

371

384

125

108

113

159

811

621

175

-681

811

-213

-26.2

-16

1,040

10.4

5.6

621

168

27.1

-63

516

26.1

2.9

856

169

19.7

-58

746

228

-10.2

1.5

FY19

FY20

59,177 68,294

13.7

15.4

54,619 64,189

4,558 4,104

7.7

6.0

982 1,481

339

416

531

468

3,769 2,675

-883

-681

4,652

1,280

27.5

3,290

2,407

10.9

4.1

3,357

480

14.3

-185

3,062

-119

2,544

-119

5.7 -146.8

3.7

-0.9

It is relevant to note that we have adj. the reported numbers for the sale of land. The transaction led to an increase in sales by

INR1,347m, EBITDA by INR781m, and PAT by INR617m.

12 May 2020

Godrej Agrovet

Key performance indicators

Y/E March

Segment Revenue Gr. (%)

Animal Feed (AF)

Palm Oil

Crop Protection

Dairy

Segment EBIT Margin (%)

Animal Feed

Palm Oil

Crop Protection

Dairy

AF Volumes (000'MT)

AF Realization (INR/kg)

Cost Break-up

RM Cost (% of sales)

Staff Cost (% of sales)

Other Cost (% of sales)

Gross Margins (%)

EBITDA Margins (%)

EBIT Margins (%)

16.2

28.5

-8.1

1.5

4.9

21.3

29.7

0.1

304

24.2

76.1

5.2

9.3

23.9

9.4

7.9

16.3

-0.2

23.1

2.3

3.2

17.2

25.3

-0.1

304

23.4

77.2

4.4

9.5

22.8

8.9

7.4

FY19

18.4

33.6

47.9

-1.6

3.1

17.6

17.8

4.0

324

23.6

78.4

5.2

9.4

21.6

6.9

5.1

29.2

22.5

-3.3

-2.5

5.2

-0.2

18.3

1.4

332

26.6

76.5

5.1

13.1

23.5

5.4

3.5

20.0

-13.6

11.6

2.4

4.8

8.7

26.8

2.1

324

27.3

76.2

5.2

10.3

23.8

8.3

6.3

FY20

32.3

24.2

-5.4

2.7

3.5

19.4

17.5

-0.2

350

28.9

79.5

5.2

9.6

20.5

5.6

3.6

-0.1

4.9

38.1

5.0

3.8

6.5

19.3

-2.1

294

29.9

77.4

5.2

14.2

22.6

3.2

0.7

FY19

FY20

31.9

-11.2

7.0

2.2

4.6

12.2

19.8

-0.1

332

28.2

78.3

5.1

10.1

21.7

6.5

4.4

20.2

16.0

12.0

0.0

4.2

16.7

23.4

1.3

1,265

24.5

77.1

5.0

10.3

22.9

7.7

6.0

20.1

(0.9)

11.0

3.0

4.1

13.3

21.1

(0.0)

1,301

28.6

77.9

5.2

10.9

22.1

6.0

3.8

12 May 2020

Godrej Agrovet

Key Exhibits

Exhibit 1: Consolidated revenue trend

Revenue (INRm)

19.1

11.4

7.3

1,393

1,407

FY19

1,010

749

1,419

1,197

FY20

Source: Company, MOFSL

1,006

Growth (%)

22.6

14.7

Exhibit 2: Consolidated EBITDA trend

EBITDA (INRm)

9.4

8.9

6.9

5.4

8.3

Margin (%)

16.4

16.5

6.5

5.6

3.2

482

8.8

14,844 15,884 14,541 13,909 17,026 18,511 17,827 14,930

FY19

FY20

Source: Company, MOFSL

Exhibit 3: Consolidated adj. PAT trend

Adj PAT (INRm)

16.7

8.7

9.1

1.4

10.4

Growth (%)

26.1

(5.3)

802

(10.2)

942

FY19

409

254

760

1,040

FY20

516

228

Source: Company, MOFSL

Exhibit 4: Animal Feed

Particulars

Volume (MT)

Growth (%)

Revenue (INRm)

Growth (%)

EBIT (INRm)

Margin (%)

Growth (%)

1QFY19

3,04,220

19.0

7,373

16.2

361

4.9

(9.3)

2QFY19

3,04,223

15.9

7,115

16.3

225

3.2

(20.7)

3QFY19

3,24,261

12.5

7,660

18.4

237

3.1

(39.0)

4QFY19

3,31,806

10.4

8,821

29.2

461

5.2

(5.5)

1QFY20

3,24,035

6.5

8,850

20.0

424

4.8

17.2

2QFY20

3,32,301

9.2

9,387

31.9

431

4.6

91.1

3QFY20

3,50,290

8.0

10,130

32.3

350

3.5

47.5

4QFY20

2,94,215

(11.3)

8,811

(0.1)

332

3.8

(27.9)

FY19

FY20

12,64,510 13,00,841

14.2

2.9

30,968

37,177

20.2

20.1

1,285

1,537

4.2

4.1

(17.6)

19.6

Source: Company, MOFSL

Exhibit 5: Consolidated Crop Protection

Particulars

Revenue (INRm)

Growth (%)

EBIT (INRm)

Margin (%)

Growth (%)

1QFY19

2,567

(8.1)

762

29.7

6.8

2QFY19

3,192

23.1

808

25.3

24.7

3QFY19

2,305

47.9

411

17.8

14.6

4QFY19

1,811

(3.3)

331

18.3

(5.7)

1QFY20

2,866

11.6

768

26.8

0.8

2QFY20

3,416

7.0

678

19.8

(16.1)

3QFY20

2,180

(5.4)

381

17.5

(7.5)

4QFY20

FY19

FY20

2,501

9,875

10,964

38.1

12.0

11.0

483

2,312

2,309

19.3

23.4

21.1

46.1

11.6

(0.1)

Source: Company, MOFSL

12 May 2020

Godrej Agrovet

Exhibit 6: Standalone Crop Protection

Particulars

Revenue (INRm)

Growth (%)

EBIT (INRm)

Margin (%)

Growth (%)

1QFY19

1,913

(7.7)

702

36.7

13.8

2QFY19

2,048

25.3

592

28.9

15.6

3QFY19

1,082

32.6

218

20.1

(9.2)

4QFY19

452

(23.1)

19.7

58.9

1QFY20

2,093

9.4

744

35.5

6.0

2QFY20

2,002

(2.2)

550

27.5

(7.1)

3QFY20

912

(15.7)

185

20.3

(15.1)

4QFY20

FY19

FY20

670

5,495

5,677

48.2

7.5

3.3

1,601

1,538

8.8

29.1

125

(33.7)

12.4

(3.9)

Source: Company, MOFSL

Exhibit 7: Astec Life Sciences

Particulars

Revenue (INRm)

Growth (%)

EBITDA (INRm)

Margin (%)

Growth (%)

1QFY19

650

(13.6)

14.2

2QFY19

1,146

17.4

253

22.1

54.3

3QFY19

1,812

138.4

319

17.6

111.3

4QFY19

1,338

4.2

288

21.5

(12.7)

1QFY20

770

18.5

9.5

(20.7)

2QFY20

1,420

23.9

171

12.0

(32.4)

3QFY20

2,250

24.2

436

19.4

36.7

4QFY20

FY19

FY20

1,805

4,946

6,245

34.9

31.1

26.3

479

952

1,159

26.5

19.2

18.6

66.3

29.2

21.7

Source: Company, MOFSL

Exhibit 8: Palm Oil

Particulars

Revenue (INRm)

Growth (%)

EBIT (INRm)

Margin (%)

Growth (%)

1QFY19

1,683

28.5

358

21.3

67.5

2QFY19

2,665

(0.2)

458

17.2

(25.6)

3QFY19

1,812

33.6

319

17.6

26.0

4QFY19

634

22.5

-1

-0.2

1QFY20

1,454

(13.6)

127

8.7

(64.6)

2QFY20

2,366

(11.2)

288

12.2

(37.2)

3QFY20

2,250

24.2

436

19.4

36.7

4QFY20

FY19

FY20

665

6,793

6,735

4.9

16.0

(0.9)

1,134

893

6.5

16.7

13.3

(4,009.1)

1.1

(21.2)

Source: Company, MOFSL

Exhibit 9: Dairy

Particulars

Revenue (INRm)

Growth (%)

EBITDA (INRm)

Margin (%)

Growth (%)

EBIT (INRm)

Margin (%)

Growth (%)

1QFY19

3,129

1.5

2.0

(12.7)

0.1

(83.9)

2QFY19

2,996

2.3

2.0

(37.9)

-4

(0.1)

3QFY19

2,780

(1.6)

179

6.4

25.2

113

4.0

25.6

4QFY19

2,674

(2.5)

127

4.7

202.4

1.4

1QFY20

3,204

2.4

138

4.3

122.6

2.1

3,220.0

2QFY20

3,063

2.2

3.0

54.2

-2

(0.1)

(52.6)

3QFY20

2,855

2.7

2.5

(59.8)

-7

(0.2)

(106.0)

4QFY20

2,808

5.0

0.7

(83.5)

-58

(2.1)

(254.0)

FY19

11,578

0.0

427

3.7

21.7

149

1.3

14.3

FY20

11,930

3.0

322

2.7

(24.6)

0.0

(100.2)

Source: Company, MOFSL

12 May 2020

Godrej Agrovet

4QFY20 conference call highlights

Animal Feed



In India, broiler production averages at 75–80m per week, which has dropped to

35–40m per week due to the COVID-19 crisis. Similarly, India usually produces

2.2b eggs in a single week v/s 1.4b per week reported currently.

Cost of production of feeds for broiler has dropped to INR77/kg currently, from

INR84–85/kg in March, on RM prices declining due to the rabi maize crop set to

enter the market.

Maize prices in the pre-COVID-19 era stood at INR22–24/kg v/s 12–14/kg

currently. Prices have fallen due to decline in poultry demand and rabi maize set

to enter the market.

Out-of-home consumption accounts for 50% of demand for chicken. Even if 15–

20% of this demand is revived, this would aid a price rise.

Consolidation is unlikely in the Animal Feed segment as barriers to entry are

low.

Aqua (shrimp and fish) prices have been remunerative for farmers. Cattle feed

sales have been impacted due to lower milk prices.

The company has been cutting credit to distributors to avoid bad debts, which

have impacted sales. Collections have taken a hit as these usually happen

toward the end of March.

The CP plant, which has been running at 60–70% utilization, is expected to run

at 100% utilization from 17

May; lost production would be recovered by

working on holidays.

In Dec’19, the company launched Hanabi, a Nissan product, which has received

an excellent response.

The company is lagging behind on placement for the kharif season, which should

ideally have happened by this time, as production processes are running slower

than usual.

A drop in labor availability would aid in increasing the consumption of

herbicides.

Astec’s growth during the quarter was led by two main factors. A) An increase in

enterprise sales, on disruption in China’s supply chain, led to growth in order

inflows from Southeast Asia, Russia, the US, and Europe. B) Moreover, Contract

Manufacturing launched two new products, which customers earlier acquired

from Chinese manufacturers.

The prices of certain Astec products are competitive with those of Chinese

products.

Three to four molecules under the registration would be launched in the

Standalone Crop Protection segment over FY21–22.

55–60% of sales are usually conducted in the July–Oct season.

The company has two mills, each with a processing capacity of 1,200MT per day.

It is also refurbishing another mill with a 600MT per day processing capacity.

Currently, the price of CPO is INR58–59kMT; prices have dropped as demand

from bakeries, restaurants, and other institutions has been impacted. Previous-

year prices were a little lower, reaching as high as INR60–68kMT in Mar’20.

Crop Protection:



Palm Oil



12 May 2020

Godrej Agrovet



Palm kernel oil finds use in industrial oils, FMCG products, and beauty products,

among others; prices have been impacted due to lower demand from end user

industries

In Palm Oil, volumes are not at risk as imports would decrease if demand starts

to increase; however, price decline stands as a key risk.

In FY20, the company processed FFB of 568k MT, sold CPO of 98.6kMT, and

supplied palm kernel oil of 12kMT.

The company is attempting to lower procurement from agents, which would not

only control the price of milk but also quality.

Over the next couple of quarters, share of revenue from value-added products

would be higher than liquid milk sales.

Milk production in India is 180m MT, 45–50mn MT of which is procured by

organized players; of this, 33% goes to value-added products (VAP) and

institutions.

The Aqua Feed and Crop Protection businesses face credit risk.

The company reported exceptional loss of INR99m in its subsidiary Godrej Tyson

Foods as demand and prices of poultry and related products plummeted toward

the end of fiscal. Accordingly, the company had to recognize inventory loss of

INR30m and loss of INR69m with reference to the fair valuation of biological

assets.

Dairy



Others:



Valuation



In the near term, COVID-19 is likely to impact GOAGRO’s performance across

businesses, barring CP; however, performance is likely to improve once

normalcy has returned.

The underlying theme across businesses remains intact:

Animal Feed:

The segment’s margin was dented due to high RM prices;

however, this has been reversed as the company has taken price hikes.

Palm Oil:

Volume growth is likely to return on the arrival of more FFB and the

corrective steps undertaken by the company to prevent the pilferage of FFB to

other mills. Additionally, a new plant with improved technology would also

ensure higher yields going forward.

Crop Protection:

GOAGRO expects 10 product launches over the next three to

five years, with revenue potential of INR10b in the Standalone business.

Dairy:

The focus is on increasing the sale of VAP, which yields higher margins

(VAP sales in the total dairy sales stood at 29% in FY20 v/s 27% last year).

We maintain our estimates and value the stock on an SOTP basis, arriving at a

target price of INR443. Maintain

Buy.

12 May 2020

Godrej Agrovet

Exhibit 10: Valuation

Particulars

Standalone:

Crop Protection

Palm Oil

Animal Feed

Unallocated expenses

Total

Subsidiaries:

Astec (mcap with 20% holdco disc)

Creamline Dairy

Godrej Tyson Foods Limited

JV/ Associate:

ACI Godrej Agrovet Private Limited

Total

CMP

Upside

EBITDA

EV/ EBITDA EV (INR

FY22E (INR

(x)

1,922

1,730

2,341

(1,291)

4,702

15.0

13.0

10.0

15.5

28,823

25,945

31,141

(12,906)

73,002

Net Debt Equity Value GOAGRO's

(INR m)

share (%)

28,823

25,945

31,141

(12,906)

68,807

9,016

9,197

(808)

13,288

99,500

100%

57%

52%

51%

50%

Value

(INR m)

28,823

25,945

31,141

(12,906)

68,807

5,180

4,774

(412)

6,644

Value/

(INR)

150

135

162

(67)

358

(2)

% Share

4,195

34%

31%

37%

-15%

81%

620

(54)

830

6,099

15.0

16.0

15.5

9,301

(808)

13,288

94,783

104

443

100%

386

15%

Source: MOFSL

Exhibit 11: Change in estimates

Earnings change

(INR m)

Revenue

EBITDA

Adj. PAT

FY21E

65,669

3,979

2,025

Old

FY22E

74,383

5,495

3,201

FY21E

66,956

4,057

2,025

New

FY22E

75,916

5,608

3,242

FY21E

Change

FY22E

Source: MOFSL

12 May 2020

Godrej Agrovet

Financials and valuations

Consolidated – Income statement

Y/E March

Total Income from Operations

Change (%)

Total Expenditure

% of Sales

EBITDA

Margin (%)

Depreciation

EBIT

Int. and Finance Charges

Other Income

PBT bef. EO Exp.

EO Items

PBT after EO Exp.

Total Tax

Tax Rate (%)

Profit from Associate & MI

Reported PAT

Adjusted PAT

Change (%)

Margin (%)

Consolidated – Balance sheet

Y/E March

Equity Share Capital

Total Reserves

Net Worth

Minority Interest

Total Loans

Deferred Tax Liabilities

Capital Employed

Gross Block

Less: Accum. Deprn.

Net Fixed Assets

Goodwill on Consolidation

Capital WIP

Total Investments

Curr. Assets, Loans&Adv.

Inventory

Account Receivables

Cash and Bank Balance

Loans and Advances

Curr. Liability & Prov.

Account Payables

Other Current Liabilities

Provisions

Net Current Assets

Appl. of Funds

FY15

33,118

6.7

30,059

90.8

3,059

9.2

370

2,690

655

137

2,172

364

2,536

605

23.9

-170

2,101

1,736

10.9

5.2

FY16

37,550

13.4

34,585

92.1

2,965

7.9

524

2,441

977

627

2,091

946

3,037

754

24.8

-356

2,639

1,693

-2.5

4.5

FY17

49,264

31.2

44,884

91.1

4,380

8.9

747

3,633

863

590

3,360

200

3,560

1,018

28.6

2,487

2,287

35.1

4.6

FY18

52,059

5.7

47,629

91.5

4,430

8.5

859

3,571

453

318

3,436

121

3,557

1,207

33.9

2,292

2,172

-5.1

4.2

FY19

59,177

13.7

54,619

92.3

4,558

7.7

982

3,577

339

531

3,769

883

4,652

1,280

27.5

3,290

2,407

10.9

4.1

FY20

68,294

15.4

64,189

94.0

4,104

6.0

1,481

2,624

416

468

2,675

681

3,357

481

14.3

-185

3,062

2,544

5.7

3.7

FY21E

66,956

-2.0

62,900

93.9

4,057

6.1

1,602

2,454

495

469

2,428

611

25.2

-208

2,025

-20.4

3.0

(INR m)

FY22E

75,916

13.4

70,308

92.6

5,608

7.4

1,707

3,901

487

607

4,021

1,012

25.2

-233

3,242

60.1

4.3

(INR m)

FY22E

1,920

19,185

21,105

3,682

5,685

1,751

32,223

28,783

7,986

20,797

2,649

1,561

1,292

24,728

11,557

9,567

566

3,037

18,803

14,447

3,796

561

5,924

32,223

FY15

926

5,478

6,404

6,848

565

13,818

6,417

975

5,443

1,380

1,858

8,847

3,888

2,693

175

2,092

3,711

2,141

1,434

136

5,136

13,818

FY16

926

6,906

7,832

2,323

13,757

1,458

25,369

12,139

564

11,575

1,949

638

2,140

14,930

6,665

4,545

420

3,299

5,862

3,349

2,312

202

9,067

25,369

FY17

1,851

8,237

10,088

2,541

6,641

1,663

20,933

14,109

1,329

12,779

1,949

504

1,755

15,157

7,381

5,219

538

2,019

11,212

8,408

2,496

308

3,946

20,933

FY18

1,920

12,193

14,114

2,693

4,098

1,730

22,635

15,185

2,214

12,971

1,949

1,904

1,952

16,749

7,629

6,315

299

2,507

12,890

9,550

2,955

385

3,859

22,635

FY19

1,920

14,570

16,490

4,010

3,950

2,086

26,536

21,246

3,196

18,050

2,649

936

1,165

19,542

9,517

7,349

299

2,378

15,807

12,394

2,934

478

3,736

26,536

FY20

1,920

16,461

18,381

3,825

6,185

1,751

30,142

23,812

4,677

19,136

2,649

1,532

1,292

22,392

9,436

8,539

508

3,910

16,859

12,885

3,467

507

5,533

30,142

FY21E

1,920

17,214

19,134

3,759

6,185

1,751

30,829

26,288

6,279

20,009

2,649

1,556

1,292

22,090

10,340

8,438

634

2,678

16,767

12,925

3,348

495

5,323

30,829

12 May 2020

Godrej Agrovet

Financials and valuations

Ratios

Y/E March

Basic (INR)

EPS

Cash EPS

BV/Share

DPS

Payout (%)

Valuation (x)

P/E

Cash P/E

P/BV

EV/Sales

EV/EBITDA

Dividend Yield (%)

FCF per share

Return Ratios (%)

RoE

RoCE

RoIC

Working Capital Ratios

Fixed Asset Turnover (x)

Asset Turnover (x)

Inventory (Days)

Debtor (Days)

Creditor (Days)

Leverage Ratio (x)

Current Ratio

Interest Cover Ratio

Net Debt/Equity

Consolidated – Cash flow statement

Y/E March

OP/(Loss) before Tax

Depreciation

Interest & Finance Charges

Direct Taxes Paid

(Inc)/Dec in WC

CF from Operations

Others

CF from Operating incl EO

(Inc)/Dec in FA

Free Cash Flow

(Pur)/Sale of Investments

Others

CF from Investments

Issue of Shares

Inc/(Dec) in Debt

Interest Paid

Dividend Paid

Others

CF from Fin. Activity

Inc/Dec of Cash

Opening Balance

Closing Balance

FY15

9.0

11.0

33.4

3.7

39.3

FY16

8.8

11.5

40.8

2.1

18.8

FY17

11.9

15.8

52.5

4.5

41.9

32.4

24.4

7.3

1.7

18.9

1.2

36.6

30.0

17.5

22.4

5.2

2.4

4.1

1.0

23.8

13.2

11.3

3.1

1.5

2.5

1.6

25.5

15.7

12.9

3.5

2.4

1.4

4.2

0.6

FY18

11.3

15.8

73.5

4.5

45.6

34.1

24.5

5.3

1.5

18.2

1.2

5.7

17.9

14.7

12.9

3.4

2.3

1.3

7.9

0.3

FY19

12.5

17.6

85.9

4.5

31.6

30.8

21.9

4.5

1.4

17.9

1.2

9.0

15.7

15.4

12.2

2.8

2.2

1.2

10.6

0.2

FY20

13.2

21.0

95.7

5.5

41.5

29.1

18.4

4.0

1.2

20.4

1.4

-1.2

14.6

11.8

8.8

2.9

2.3

1.3

6.3

0.3

FY21E

10.5

18.9

99.6

5.5

62.8

36.6

20.4

3.9

1.2

20.6

1.4

6.3

10.8

8.8

6.8

2.5

2.2

1.3

5.0

0.3

FY22E

16.9

25.8

109.9

5.5

39.2

22.9

15.0

3.5

1.1

14.8

1.4

7.0

16.1

12.9

10.4

2.6

2.4

1.3

8.0

0.2

(INR m)

FY22E

4,021

1,707

-121

-1,012

-746

3,850

-2,500

1,350

764

-1,736

-500

-487

-1,272

-2,182

-68

634

566

FY15

2,706

370

620

-557

-1,552

1,587

-499

1,088

-1,094

-5

-131

-44

-1,269

566

-650

-706

-790

-970

1,146

175

FY16

3,364

524

885

-456

-1,024

3,293

-1,610

1,683

-1,223

460

581

-3,581

-4,223

4,168

-972

-452

2,784

244

175

419

FY17

3,727

747

715

-800

5,145

9,534

-561

8,973

-1,949

7,024

610

366

-974

-7,027

-861

-7,881

119

419

538

FY18

3,717

859

453

-837

-471

3,721

-183

3,538

-2,448

1,091

-131

-2,528

-2,571

-455

-1,045

2,818

-1,250

-240

538

299

FY19

4,773

982

339

-1,097

633

5,629

-1,152

4,477

-2,759

1,719

386

-2,372

-680

-354

-1,076

-2,105

299

FY20

3,486

1,481

416

-969

-2,204

2,210

188

2,398

-2,634

-236

-2,552

2,311

-390

-1,076

-481

364

210

299

508

FY21E

2,428

1,602

-611

270

3,716

-2,500

1,216

611

-1,889

-495

-1,272

-1,701

126

508

634

12 May 2020

Godrej Agrovet

Explanation of Investment Rating

Investment Rating

Expected return (over 12-month)

BUY

>=15%

SELL

< - 10%

NEUTRAL

< - 10 % to 15%

UNDER REVIEW

Rating may undergo a change

NOT RATED

We have forward looking estimates for the stock but we refrain from assigning recommendation

*In case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall within

following 30 days take appropriate measures to make the recommendation consistent with the investment rating legend.

Disclosures

The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).

Motilal Oswal Financial Services Ltd. (MOFSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOFSL, the Research Entity (RE) as defined in the

Regulations, is engaged in the business of providing Stock broking services, Investment Advisory Services, Depository participant services & distribution of various financial

products. MOFSL is a subsidiary company of Passionate Investment Management Pvt. Ltd.. (PIMPL). MOFSL is a listed public company, the details in respect of which are

available on www.motilaloswal.com. MOFSL (erstwhile Motilal Oswal Securities Limited - MOSL) is registered with the Securities & Exchange Board of India (SEBI) and is a

registered Trading Member with National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE), Multi Commodity Exchange of India Limited (MCX) and

National Commodity & Derivatives Exchange Limited (NCDEX) for its stock broking activities & is Depository participant with Central Depository Services Limited (CDSL) National

Securities Depository Limited (NSDL),NERL, COMRIS and CCRL and is member of Association of Mutual Funds of India (AMFI) for distribution of financial products and Insurance

Regulatory & Development Authority of India (IRDA) as Corporate Agent for insurance products.

Details of associate entities of Motilal Oswal Financial Services Limited are

available on the website at

http://onlinereports.motilaloswal.com/Dormant/documents/List%20of%20Associate%20companies.pdf

MOFSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and

buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other

compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have

any other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the

specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even

though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report

MOFSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, the recipients of this report

should be aware that MOFSL may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific

merchant banking, investment banking or brokerage service transactions. Details of pending Enquiry Proceedings of Motilal Oswal Financial Services Limited are available on the

website at

https://galaxy.motilaloswal.com/ResearchAnalyst/PublishViewLitigation.aspx

A graph of daily closing prices of securities is available at

www.nseindia.com, www.bseindia.com.

Research Analyst views on Subject Company may vary based on Fundamental

research and Technical Research. Proprietary trading desk of MOFSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated

from MOFSL research activity and therefore it can have an independent view with regards to Subject Company for which Research Team have expressed their views.

Regional Disclosures (outside India)

This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability

or use would be contrary to law, regulation or which would subject MOFSL & its group companies to registration or licensing requirements within such jurisdictions.

For Hong Kong:

This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong

Kong Securities and Futures Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst

Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of

research report in Hong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity

to which this document relates is only available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these

securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not

located in Hong Kong & are not conducting Research Analysis in Hong Kong.

For U.S.

Motilal Oswal Financial Services Limited (MOFSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under

applicable state laws in the United States. In addition MOFSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers

Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any

brokerage and investment services provided by MOFSL , including the products and services described herein are not available to or intended for U.S. persons. This report is

intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as

"major institutional investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which

this document relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration

provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange

Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOFSL has entered into a chaperoning agreement with a U.S. registered broker-

dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this

chaperoning agreement.

The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S.

registered broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public

appearances and trading securities held by a research analyst account.

For Singapore

In Singapore, this report is being distributed by Motilal Oswal Capital Markets Singapore Pte Ltd (“MOCMSPL”) (Co.Reg. NO. 201129401Z) which is a holder of a capital markets

services license and an exempt financial adviser in Singapore.As per the approved agreement under Paragraph 9 of Third Schedule of Securities and Futures Act (CAP 289) and

Paragraph 11 of First Schedule of Financial Advisors Act (CAP 110) provided to MOCMSPL by Monetary Authority of Singapore. Persons in Singapore should contact MOCMSPL

in respect of any matter arising from, or in connection with this report/publication/communication. This report is distributed solely to persons who qualify as “Institutional Investors”,

of which some of whom may consist of "accredited" institutional investors as defined in section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore (“the

SFA”). Accordingly, if a Singapore person is not or ceases to be such an institutional investor, such Singapore Person must immediately discontinue any use of this Report and

inform MOCMSPL.

Specific Disclosures

1 MOFSL, Research Analyst and/or his relatives does not have financial interest in the subject company, as they do not have equity holdings in the subject company.

2 MOFSL, Research Analyst and/or his relatives do not have actual/beneficial ownership of 1% or more securities in the subject company

3 MOFSL, Research Analyst and/or his relatives have not received compensation/other benefits from the subject company in the past 12 months

4 MOFSL, Research Analyst and/or his relatives do not have material conflict of interest in the subject company at the time of publication of research report

5 Research Analyst has not served as director/officer/employee in the subject company

6 MOFSL has not acted as a manager or co-manager of public offering of securities of the subject company in past 12 months

7 MOFSL has not received compensation for investment banking/ merchant banking/brokerage services from the subject company in the past 12 months

8 MOFSL has not received compensation for other than investment banking/merchant banking/brokerage services from the subject company in the past 12 months

9 MOFSL has not received any compensation or other benefits from third party in connection with the research report

10 MOFSL has not engaged in market making activity for the subject company

12 May 2020

Godrej Agrovet

********************************************************************************************************************************

The associates of MOFSL may have:

- financial interest in the subject company

- actual/beneficial ownership of 1% or more securities in the subject company

- received compensation/other benefits from the subject company in the past 12 months

- other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the

specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even

though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report.

- acted as a manager or co-manager of public offering of securities of the subject company in past 12 months

- be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the

company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies)

- received compensation from the subject company in the past 12 months for investment banking / merchant banking / brokerage services or from other than said services.

The associates of MOFSL has not received any compensation or other benefits from third party in connection with the research report

Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only. While calculating beneficial holdings, It does not

consider demat accounts which are opened in name of MOFSL for other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income from

clients which are not considered in above disclosures.

Analyst Certification

The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the

research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.

Terms & Conditions:

This report has been prepared by MOFSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and

may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent

of MOFSL. The report is based on the facts, figures and information that are considered true, correct, reliable and accurate. The intent of this report is not recommendatory in

nature. The information is obtained from publicly available media or other sources believed to be reliable. Such information has not been independently verified and no guaranty,

representation of warranty, express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. The

report is prepared solely for informational purpose and does not constitute an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial

instruments for the clients. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. MOFSL will not treat recipients as

customers by virtue of their receiving this report.

Disclaimer:

The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or

distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent. This report and information herein is solely for

informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Nothing

in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances.

The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment

objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. Each recipient of this

document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this

document (including the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views

expressed may not be suitable for all investors. Certain transactions -including those involving futures, options, another derivative products as well as non-investment grade

securities - involve substantial risk and are not suitable for all investors. No representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of

the information and opinions contained in this document. The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and

should not be treated as endorsement of the views expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make

modifications and alternations to this statement as may be required from time to time without any prior approval. MOFSL, its associates, their directors and the employees may from

time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to

perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a

separate, distinct and independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of

information that is already available in publicly accessible media or developed through analysis of MOFSL. The views expressed are those of the analyst, and the Company may or

may not subscribe to all the views expressed therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on,

directly or indirectly, to any other person or published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or

entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law,

regulation or which would subject MOFSL to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in

all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction.

Neither the Firm, not its directors, employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost

revenue or lost profits that may arise from or in connection with the use of the information.

The person accessing this information specifically agrees to exempt MOFSL or any of its

affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOFSL or any of its affiliates or employees responsible for any such

misuse and further agrees to hold MOFSL or any of its affiliates or employees free and harmless from all losses, costs, damages,

expenses that may be suffered by the person

accessing this information due to any errors and delays.

Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 71934200/ 022-71934263;

Website

www.motilaloswal.com.CIN

no.: L67190MH2005PLC153397.Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road,

Malad(West), Mumbai- 400 064. Tel No: 022 7188 1000.

Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst:

INH000000412. AMFI: ARN - 146822; Investment Adviser: INA000007100; Insurance Corporate Agent: CA0579;PMS:INP000006712. Motilal Oswal Asset Management Company

Ltd. (MOAMC): PMS (Registration No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth

Management Ltd. (MOWML): PMS (Registration No.: INP000004409) is offered through MOWML, which is a group company of MOFSL. Motilal Oswal Financial Services Limited is

a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs,Insurance Products and IPOs.Real Estate is offered through Motilal Oswal Real Estate Investment Advisors II Pvt.

Ltd. which is a group company of MOFSL. Private Equity is offered through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group company of MOFSL.

Research & Advisory services is backed by proper research. Please read the Risk Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no

assurance or guarantee of the returns. Investment in securities market is subject to market risk, read all the related documents carefully before investing. Details of Compliance

Officer: Name: Neeraj Agarwal, Email ID: na@motilaloswal.com, Contact No.:022-71881085.

* MOSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National

Company Law Tribunal, Mumbai Bench.

12 May 2020