Godrej Agrovet Ltd Quarterly Results Q1FY27 stock analysis

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Sector Outlook: Neutral

Margin pressures weigh on earnings, while recovery supports growth

Godrej Agrovet reported revenue growth of 9.2% YoY/ 22.4% QoQ to Rs. 2,8552 mn in Q1FY27, supported by robust volume-led growth across Animal Nutrition, Oil Palm, Dairy and Bangladesh operations. Revenue growth remained broad-based across key segments, led by strong momentum in Vegetable Oil (+24.1%) and Animal Feed (+12.6%), while Dairy (+11.5%) and Poultry & Processed Food (+0.7%) remained relatively resilient. This was partly offset by a decline in Crop Protection (-13.3%) and Other Businesses (-28.0%). EBITDA declined 10.9% YoY / up 72.9% QoQ to Rs. 2,402 mn, while EBITDA margin contracting 190bps YoY / 246bps QoQ to 8.4%, impacted by elevated milk procurement costs, input-cost inflation and weak Crop Care operating leverage. Net profit stood at Rs. 1,283 mn, decline 13.8% YoY / up 25.4% QoQ, above market expectations of Rs. 1180 mn, while PAT margin improved to 4.5% versus 4.4% in the previous quarter. Astec LifeSciences remains a key turnaround driver, with the business achieving EBITDA breakeven in Q1FY27 and management expecting >20% revenue growth in FY27, while CDMO contribution is expected to increase to ~50-52%. Management remains confident of delivering at least double-digit EBITDA growth in FY27, with greater clarity on the full-year outlook expected after Q2FY27.

targets with expanding margins, and Comfort Click remained EPS accretive.

Valuation and Outlook

Godrej Agrovet delivered resilient topline growth despite a challenging operating environment, with strong momentum in Animal Nutrition and Oil Palm, continued recovery at Astec and improving value-added mix across Dairy and Foods. However, near-term profitability remains under pressure from elevated milk procurement costs, geopolitical-led input inflation and delayed monsoon impact on Crop Care. Management remains confident of delivering at least double-digit consolidated EBITDA growth in FY27, with a more precise range expected by the end of Q2 after assessing the Crop Care recovery. The company’s long-term growth outlook remains constructive, supported by Animal Nutrition premiumization and volume growth, Oil Palm area expansion and downstream integration, Astec’s recovery and CDMO ramp-up, and the increasing contribution from branded B2C Foods and value-added Dairy products. Management expects annual CapEx of around Rs. 250-350 crore, including investments in Oil Palm integrated facilities and specialty fats, with a disciplined investment filter targeting ~16-18% IRR. The downstream Oil Palm value-added business, once fully scaled, is expected to add ~200bps to the overall EBITDA profile. Overall, near-term margins are likely to remain subdued, but improving operating performance in Animal Nutrition and Oil Palm, Astec’s turnaround, Crop Care recovery prospects and increasing exposure to value-added and branded businesses provide strong medium-to-long-term earnings visibility.

Key concall Highlights

Management Outlook

Management remains confident of sustaining EBIT/tonne at around Rs. 2,050 – 2,150. Strategic sourcing, premiumization, geographic expansion and NPD remain key structural growth drivers. The company passed on ~60 – 70% of maize price increases while maintaining healthy volume growth, with cattle feed volumes up 15% YoY.

Oil Palm Business Outlook:

Management expects high single-digit to early double-digit FFB volume growth over the next 4-5 years, supported by plantation expansion from ~80,000 hectares to ~150,000 hectares, new geographies and plantation maturity. The downstream specialty fats business is expected to add ~200bps to the overall EBITDA profile once fully scaled.

Domestic Crop Protection:

Q1 performance was impacted by delayed monsoon and slower kharif sowing, but management expects a better H2 supported by a favorable base, improving weather, firm chilli prices and new products. Ashitaka has performed ahead of expectations, while Takai and Ghasnash are scaling up. Ashitaka and Takai together are expected to contribute ~18 – 20% of Q1 sales in their first season.

Astec LifeSciences:

Management raised its full-year revenue growth expectation to above 20% from the earlier ~20% guidance. CDMO salience is expected at ~50 – 52%, with some order execution shifting from H1 to H2. EBITDA margins in CDMO remain healthy, while enterprise margins are normalizing following temporary benefits from lower-cost raw materials and higher finished-product prices.

Dairy Business Outlook:

Dairy volumes grew 8%, translating into ~11.5% value growth, while value-added products increased to 49% of sales. Elevated milk procurement costs are expected to remain a pressure for another 2-3 quarters, while packaging inflation should normalize by August. Management remains focused on calibrated pricing, cost optimization, route-to-market transformation and premiumization to improve profitability over the next 18-24 months.

ACI Godrej

The Bangladesh JV returned to strong growth, reporting double-digit growth across volumes, revenue and PBT, supported by broad-based volume growth and operating leverage. Management sees the business as a key turnaround and growth opportunity over the coming years.

Capex Update:

FY27 CapEx is guided at ~Rs. 250-350 crore, including investments in the Oil Palm integrated complex and specialty fats facilities. Management maintains a disciplined capital allocation approach, with investments generally required to deliver ~16-18% IRR.