3 August 2020
1QFY21 Results Update | Sector: Mid cap
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TP: INR540 (+15%)
Lower RM costs drive margin expansion
Operating performance beats expectations
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
Financials & Valuations (INR b)
EPS Gr. (%)
Div Yield (%)
FCF Yield (%)
90.4 / 1.2
598 / 265
GOAGRO’s 1QFY21 revenues declined; however, EBITDA margin expanded
due to lower RM costs, which led to 17% EBITDA growth. Consolidated
margin expansion was led by animal feed (AF), Astec and Godrej Tyson
Foods. This was partially offset by weak performance in palm oil, standalone
crop protection (CP) and dairy businesses.
We have increased our earnings estimate for FY21/FY22E by 14%/4% after
factoring in the beat to our estimates. We value the stock on SOTP basis to
arrive at a TP of INR540. Maintain
Revenue declined 9% YoY to INR15.5b (v/s est. INR15.7b), mainly due to
AF/dairy businesses, which was offset by growth in palm oil, CP and Tyson
Foods. EBITDA margins expanded 230bp YoY to 10.7% (v/s est. 8.2%) due to
330bp gross margin expansion. This was offset by 70bp/30bp expansion in
employee/other expenses as % of sales. Adj. PAT grew 16% YoY to INR885m
(v/s est. INR700m).
revenue declined 15% YoY (to INR7.5b) owing to 17% volume
decline, which was offset by price increase/mix changes (+2% YoY). Volumes
across segments were impacted due to the extended lockdown in 1QFY21.
EBIT margins witnessed sharp 160bp expansion to 6.4% due to favorable
input prices. EBIT/kg grew 37% YoY to INR1.8/kg (+59% QoQ).
Palm oil business
grew 8% YoY to INR1.6b due to increase in prices of crude
palm oil and palm kernel oil. Lower arrival (down 12% to 123kMT) of Fresh
Fruit Bunches (FFBs) and lower yields (16% v/s 17% last year) led to EBIT
margin contraction of 460bp (to 4.1%).
grew 12% YoY (to INR3.2b) with EBIT margin contracting 50bp
Sales in standalone CP
dipped 1% YoY (to INR2.1b) while EBIT
declined 19% YoY. Production disruption caused by the extended lockdown
resulted in lower-than-expected sales volume of higher-margin specialty
products, which dented profitability.
45%/302% due to strong volumes and higher realizations in the enterprise
declined 26% YoY and stood at INR2.4b with EBIT margin
contracting 70bp to 1.4%. Lower demand for milk and value-added products
during 1QFY21 led to decline in volumes, sales and margins.
Godrej Tyson Foods
revenue grew 22% YoY (to INR1.7b) with EBITDA margin
of 13% (v/s 4.7% last year). Favorable input prices supported profitability.
GOAGRO expects benefits from lower RM costs to moderate, and thus,
margin expansion witnessed in the AF segment is likely to reduce.
witnessed sharp uptick in volumes and sales, driven by increased
consumption of ready-to-cook products by households.
Astec, animal feed and Godrej Tyson Foods drive margin expansion
Shareholding pattern (%)
Jun-20 Mar-20 Jun-19
Note: FII includes depository receipts
Highlights from management commentary
Research Analyst: Sumant Kumar
3 August 2020
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Investors are advised to refer through important disclosures made at the last page of the Research Report.