Kotak Institutional Equities bets on Godrej Agrovet’s turnaround story, sees upside potential of over 9%

Godrej Agrovet (GAVL) has shifted focus on value-added and specialty segments while taking cost-cutting measures, said the domestic brokerage firm Kotak Institutional Equities as they upgraded the stock to a ‘buy’ with a target price of Rs 740.

“We raise the FY25-27E EPS by 8-13%, primarily driven by upward revisions in crop protection and dairy, amid expectations of a sustainable turnaround,” said a report by Kotak Institutional Equities.

The domestic brokerage believes that these interventions should help reduce GAVL’s vulnerability to cyclical downturns and drive a higher margin and less volatile earnings stream in the years to come.


Further, Abhijit Akella, Analyst at Kotak Equities stated that this expected transformation of GAVL is likely under-appreciated by the street, leading to what are still-attractive valuations of 24X/19X FY25/26E P/E.

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GAVL has already turned around its standalone crop protection business, which demonstrated 37% year-on-year (YoY) revenue growth in FY24, along with an industry-leading 31% EBIT margin, owing to an 80% revenue share from specialty products.

Additionally, the dairy segment’s turnaround also seems sustainable, with EBITDA margins at 8% in 4Q FY24 due to substantial cost-cutting measures and a rising share of value added products.

Kotak has mentioned that they expect all segments of the company to move towards market-leading scale in the coming years.

The shares of Godrej Agrovet have surged 40% in the last one year while gaining 13% on a year-to-date basis, as per BSE analytics.

Technically, the stock is well placed on charts, trading above all its significant exponential moving averages near a mid range level of 66.5 on the RSI.

On BSE, the stock was trading at Rs 630.55 today around 3:15 pm.

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