Godrej Agrovet Ltd Quarterly Results Q4 FY 25 stock analysis

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Sector Outlook: Neutral

Subdued performance, better recovery expected ahead

Godrej Agrovet Ltd. reported a flat revenue growth YoY / down 12.9% QoQ to Rs. 21,336 mn, below market expectations of Rs. 22,400 mn. The company reported annual revenue growth in business segments such as the Vegetable Oil business (+30%), Crop Protection (+6%) and other businesses (+32%). At the same time, Animal Feed (-4%), Dairy business (-2%), and Poultry and Processed Food (-17%) saw a decline in revenue. EBITDA decreased 0.9% YoY / down 33.3% QoQ to Rs. 1,467 mn, while EBITDA margin stood at 6.9% (down 211bps QoQ) in Q4FY25. The net profit stood at Rs. 661 mn (up 0.9% YoY / down 39.8% QoQ) in Q4FY25, below market expectations of Rs. 735 mn. The PAT margin was 3.1% versus 4.5% in the previous quarter. Management has guided for a robust 16–18% growth in both revenues and earnings for FY26, supported by multiple business levers. Net profit is likely to increase at a similar rate in FY26. Increased profitability at Astec is expected to offset moderation in domestic crop protection business margins.

Key Concall Highlights

Animal Feed Business Outlook:

The Animal Feed business margins improved in FY25, with favourable commodity prices and cost-optimization measures. Volumes remained flat annually, primarily due to lower placements & lower end product prices in the first half of the year. The Animal Feed segment is expected to deliver improved performance in the future, driven by favourable raw material prices. Growth will be further led by volume recovery in cattle and poultry feed, while the aqua feed category is expected to remain flat due to subdued end-market demand. Strategic focus on efficient raw material procurement and cost optimization will aid profitability.

Oil Palm Business Outlook:

The segment’s revenues and margins improved significantly in FY25, buoyed by increased average realizations of Crude Palm Oil (CPO) and Palm Kernel Oil (PKO). Oil Palm Business performance is expected to benefit from increasing fresh fruit bunch (FFB) procurement and expanding processing capacities in Mizoram and Telangana. Although current FFB prices are lower annually due to global crude palm oil price corrections, volume growth and recovery in international prices could support profitability. Higher realization in the branded oil category is also anticipated to contribute positively.

Domestic Crop Protection:

The company standalone Crop Protection segment results witnessed strong growth in the Q4FY25 due to higher volumes of the in-house category of products. Management expects a normal monsoon to drive good volume growth during the Kharif season. The company will launch one product under the in-licensing category for the corn crop in the upcoming season. The company wants to diversify geographically and expand into crops such as vegetables. These measures are expected to drive 30% revenue growth in FY26 but moderate EBITDA margins from current high levels. Over the next few years, margins may moderate further but remain above peer levels and in the 25-30% range. A focus on liquid formulations and new product introductions will be key growth drivers.

Astec LifeSciences:

Astec Lifesciences is undergoing a strategic shift from generic product sales to CDMO. The company’s FY25 is expected to be a transition year with flat or modest revenue growth, as new CDMO contracts ramp up gradually. The company is investing in R&D and expanding capacity to strengthen its long-term positioning in the global agrochemical supply chain. Margin recovery is expected from FY26 onwards, driven by operational efficiency and higher-value projects.

Dairy Business Outlook:

The Dairy segment is expected to maintain stable performance with improved realizations due to premiumization and product mix enhancement. Strategic initiatives in value-added products and strengthening distribution channels will support topline growth. Milk procurement prices have stabilized, which should help in sustaining margins.

ACI Godrej:

ACI Godrej continues to face margin pressure due to high feed costs and volatile realizations. However, the company is taking steps to increase focus on branded products and value-added offerings to improve profitability.

Capex Plan:

The company will incur capex mainly in the oil palm segment, while other segments will receive primarily maintenance capex.

Valuation and Outlook

Godrej Agrovet reported subdued performance in Q4FY25 but along expected lines in a seasonally slow quarter. However, the company is poised for a steady recovery and growth across key business segments in FY26. The company expects stable EBIT per tonne in the Animal Feed segment, supported by favourable raw material prices and volume recovery in cattle and poultry feed, although aqua feed may remain flat. The Domestic Crop Protection business is expected to rebound with double-digit growth, driven by normalized channel inventory, new product launches, and a strengthened distribution network. The dairy segment is poised for strong double-digit revenue growth and margin expansion, underpinned by aggressive brand investments and premiumization strategies. The oil palm business is expected to post volume growth, with realizations likely to remain stable annually, further bolstering topline performance. Under Godrej Tyson Foods, the Poultry segment continues to face margin pressure but is focusing on cost rationalization and branded value-added products to restore profitability. A key driver will be the expected turnaround at Astec LifeSciences, which is projected to swing from EBITDA losses to profitability, aided by momentum in its high-growth CDMO business. Over the medium term, the company is targeting EBITDA margins of over 20% in the CDMO segment within the next 3–4 years. Overall, the company’s performance improvement in Q4FY25 is subdued, and we look forward to further consistency in performance in the quarters to consider a more constructive stance in FY26. However, the turnaround initiatives taken by the company are moving broadly in the right direction, and the medium-to-long-term outlook remains positive.