Godrej Agrovet Stock EXPLODES Upwards? ICICI Securities' Bold BUY Call & ₹935 Target Stuns Investors!

Godrej Agrovet (GOAGRO) reported muted results for the second quarter, with EBITDA and PAT declining by 4% and 10% year-on-year, respectively. This performance was significantly impacted by a weaker showing in the standalone crop protection business and its subsidiary, Astec Lifesciences. Factors contributing to this decline included a prolonged monsoon season that shortened the product application window and delays in delivery timelines by some CDMO clients, pushing their orders to the second half of the fiscal year (H2).

However, the company's animal feed and vegetable oil segments demonstrated resilience and strong performance, partially offsetting the weaker segments. The outlook for H2 is more positive, with expectations of a recovery in Astec Lifesciences, continued strength in animal feed and vegetable oil, and a better application window for crop protection products.

Impact: ICICI Securities has reiterated its BUY rating on Godrej Agrovet, setting a revised target price (TP) of INR 935. This target suggests an approximately 51% upside potential from the current market price (CMP). The brokerage firm anticipates robust 21% EPS growth and significant improvements in RoE and RoCE through FY28E, which are not fully priced into the current stock valuation. Minor adjustments have been made to EPS estimates for FY27E and FY28E, lowering them by 2.3% and 5.3%, respectively. The Sum of the Parts (SoTP) valuation supports this target price.

Rating: 7/10

Difficult terms: - EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization - A measure of a company's operational profitability. - PAT: Profit After Tax - The net profit remaining after all expenses and taxes are deducted. - YoY: Year-on-Year - Comparison of financial metrics with the same period in the previous year. - CDMO: Contract Development and Manufacturing Organization - Companies that provide outsourced drug development and manufacturing services. - H2: Second Half - Refers to the latter half of the financial year. - EPS: Earnings Per Share - A company's profit allocated to each outstanding share of common stock. - RoE: Return on Equity - A profitability ratio that measures how effectively a company generates profits from its shareholder equity. - RoCE: Return on Capital Employed - A financial ratio that measures a company's profitability and the efficiency with which it generates profits from its capital. - CMP: Current Market Price - The current trading price of a stock on an exchange. - SoTP valuation: Sum of the Parts valuation - A method of valuing a company by adding up the estimated values of its individual business segments.