Godrej Agrovet Q3 Results Review - Mixed Bag Numbers; Crop Protection Business Disappoints: Motilal Oswal

Motilal Oswal Report

Godrej Agrovet Ltd.'s consolidated revenue grew 12% YoY to Rs 23.2 billion (our estimate: Rs 22.9 billion) on the back of strong growth across businesses, except palm oil business (down 6% YoY) and crop protection (down 1% YoY). Ebitda margin contracted 70 bps YoY to 5.9% (estimate: 5.8%).

Ebitda stood at Rs 1.4 billion, flat YoY (our estimate: Rs 1.3 billion). Adjusted profit after tax grew 50% YoY to Rs 1.2 billion (our estimate: Rs 686 million, however, it includes Rs 708 million related to a land sale during the quarter.)

Animal feed business: Revenue grew 15% YoY to Rs 12.7 billion, primarily led by cattle feed category (up 15% YoY). Total sales volume grew 7% YoY to 383.7 thousand metric tonne. Ebit/kg stood at Rs 1.51 (up 5% YoY/9% QoQ).

Palm oil business: Revenue declined 6% YoY to Rs 3.6 billion and Ebit margin contracted 330 bps YoY to 21.9%. Ebit stood at Rs 794 million (down 18% YoY). Strong volume growth was offset by lower crude oil prices (crude palm oil/palm kernel oil prices declined 24%/26% YoY).

Crop protection business: Consolidated revenue/Ebit declined 1%/45% YoY to Rs 2.2 billion/Rs 86 million, respectively, led by a decline in Astec (down 32%/80% YoY to Rs 1.2 billion/Rs 71 million). Consolidated Ebit margin contracted 310 bp YoY to 4% due to lower realisations for key products, elevated input costs, and unfavorable product mix.

Poultry business revenue grew 38% YoY to Rs 2.8 billion with Ebit of Rs 132 million versus loss of Rs 77 in Q3 FY22. While the dairy business revenue grew 21% YoY to Rs 3.5 billion, it registered an operating loss of Rs 136 million.

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