Buy Godrej Agrovet, target price Rs 758: Motilal Oswal

Motilal Oswal has buy call on Godrej Agrovet with a target price of Rs 758. The current market price of Godrej Agrovet Ltd. is Rs 652.75. Time period given by analyst is one year when Godrej Agrovet Ltd. price can reach defined target.

Godrej Agrovet Ltd., incorporated in the year 1991, is a Mid Cap company (having a market cap of Rs 12619.12 Crore) operating in Agriculture/Horticulture/Livestock sector.

Financials
For the quarter ended 31-03-2021, the company reported a Consolidated Total Income of Rs 1472.39 Crore, down -4.34 % from last quarter Total Income of Rs 1539.23 Crore and down -10.42 % from last year same quarter Total Income of Rs 1643.62 Crore. Company reported net profit after tax of Rs 49.87 Crore in latest quarter.

Investment Rationale
The Animal Feed segment is seeing lower demand from Hotels, Restaurants, and Catering (HORECA) due to the second wave and is still operating at lower capacity utilization v/s pre-COVID levels. This has impacted demand for milk, chicken, and eggs. While recovery in the segment has been marginally postponed, it is expected to deliver a better performance v/s FY21 on a low base. The brokerage expects a 39% revenue CAGR over FY21–23. It values the stock on an SoTP basis to arrive at TP of INR758.


Promoter/FII Holdings
Promoters held 70.7 per cent stake in the company as of March 31, 2021, while FIIs held 2.8 per cent, DIIs 1.7 per cent and public and others 24.8 per cent.