ICICI Securities has reaffirmed its BUY rating on Godrej Agrovet (GOAGRO), citing a sharp recovery expected in the second half of FY26 and robust earnings potential through FY28. The brokerage has revised Godrej Agrovet target price to INR 935 (down from INR 980), implying a potential upside of 65% from the current market price of INR 567.
Despite short-term challenges from an extended monsoon and weak crop protection performance, ICICI Securities sees Godrej Agrovet’s diversified agri-portfolio—spanning animal feed, vegetable oils, and dairy—positioned for a multi-year growth cycle.
Muted Q2FY26 but Resilient Core Operations
For Q2FY26, GOAGRO reported a consolidated EBITDA of INR 210 crore and PAT of INR 90 lakh, down 4% and 10% year-on-year, respectively. The subdued quarter was mainly driven by:
- Weakness in standalone crop protection and Astec Lifesciences, a key subsidiary.
- A “long tail” monsoon curtailed spraying opportunities and delayed client deliveries.
However, the blow was cushioned by resilience in animal feed and a strong showing in the vegetable oil business, where operating margins hit a multi-year high of 22%.
Segmental Insights: Strength in Diversity
Animal Feed: Volume Expansion and Market Share Gains
Animal feed volumes grew 11% YoY and 7% QoQ, led by 18% growth in the cattle feed segment. EBIT per tonne stood at INR 1,757, and management expects profitability between INR 1,750–1,850 per tonne for FY26–28. ICICI Securities projects a 9.5% CAGR in feed volumes and continued market share expansion.
Vegetable Oil: Outperformance Continues
The palm oil division emerged as a key growth driver, with revenue up 45% YoY and EBIT surging 88% YoY to INR 138 crore. Improved extraction ratios (OER at a record 19%) and higher realizations supported margins. ICICI expects ~14% annual EBIT growth in this business through FY28, bolstered by new capacity additions and strong FFB yields.
Crop Protection: Temporary Setback, Long-Term Growth
Crop protection revenues fell 30% YoY due to rainfall and reduced acreages.
However, new product launches—such as Gracia (insecticide) and Ashitaka (maize herbicide)—and the upcoming Dahej plant are expected to drive an 8% CAGR over FY26–28.
Astec Lifesciences: Turning the Corner
Astec’s revenue fell 25% YoY as the CDMO business faced deferred orders, but the enterprise segment posted 16% YoY growth. The company expects EBITDA breakeven by FY26-end, with revenue surpassing INR 500 crore. ICICI highlights strong R&D capabilities and pipeline diversification into specialty chemicals as future catalysts.
Dairy & Poultry: Value-Added Shift Boosts Margins
Dairy EBIT margin improved to 4.6%, supported by higher value-added product (VAP) share—now 36% vs. 32% last year. In poultry, the branded product mix rose to 86%, mitigating live bird market weakness. By FY28, management aims for over 50% VAP contribution in dairy, driving sustained margin expansion.
Financial Outlook: Growth Momentum Building
| Metric | FY25A | FY26E | FY27E | FY28E |
|---|---|---|---|---|
| Revenue | 9,382.8 | 9,864.8 | 11,032.3 | 12,052.9 |
| EBITDA | 816.2 | 884.5 | 991.6 | 1,249.7 |
| PAT | 429.7 | 495.4 | 556.3 | 728.1 |
| EPS (INR) | 22.3 | 25.8 | 28.9 | 37.9 |
| RoE (%) | 17.5 | 20.0 | 20.7 | 24.7 |
| RoCE (%) | 14.2 | 15.4 | 16.8 | 21.2 |
ICICI forecasts 19% revenue CAGR and 21% EBITDA CAGR over FY26–28, with margin improvement to 10.4% and RoE touching 25%. Valuations appear undemanding, with GOAGRO trading at 16.3x FY28E P/E and 10.3x EV/EBITDA, below its five-year historical average.
Godrej Agrovet Target Price & Valuation
ICICI Securities’ sum-of-the-parts (SoTP) valuation assigns:
- INR 323/share to animal feeds,
- INR 307/share to vegetable oils,
- INR 188/share to crop protection,
- INR 64/share to dairy,
- INR 48/share to Astec Lifesciences,
culminating in a target price of INR 935 per share, representing a potential 65% upside from current levels.
Key Catalysts and Risks
Upside drivers:
- Normal monsoon cycle in FY26–27,
- Softening of raw material prices,
- Strong product pipeline in crop protection,
- Expansion of high-margin dairy and palm oil segments.
Risks:
- Weather volatility,
- Commodity price inflation,
- Regulatory restrictions on poultry exports,
- Slower recovery in Astec’s CDMO segment.
Final Words
ICICI Securities believes the market is underestimating Godrej Agrovet’s structural turnaround.
“While near-term weather headwinds weighed on Q2 performance, the medium-term outlook across core businesses remains robust,” wrote analysts Probal Sen and Hardik Solanki. “We maintain BUY with a target price of INR 935, reflecting 65% potential upside.”
With multiple growth levers firing—from animal feed strength to palm oil momentum—Godrej Agrovet may well be primed for a re-rating over FY26–28.
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