Company Background and Business Model
Godrej Agrovet was incorporated in 1991 in the state of Gujarat. Godrej Agrovet Limited (GAVL), is a diversified, R&D focused agri-business company with operations across five business verticals viz. animal feed, crop protection, oil palm, dairy, and poultry & processed foods. GAVL is the largest crude palm oil producer in India, in terms of market share,& the leader in compound cattle feed in India as of March 2017. Godrej Agrovet Ltd has joint ventures Godrej Tyson Foods Ltd, a food processing firm, and ACI Godrej Agrovet Pvt. Ltd, which runs a poultry products business in Bangladesh. The Company made significant investments to enhance R&D capabilities over the years.
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At its CMP of Rs546.65/-, the stock trades at a PE of ~34.2x its FY18 estimated annualised EPS of Rs16/-. GAVL is focused on improving productivity of farmers by innovating products and services that sustainably increase crop and livestock yields. The Company made significant investments to enhance their R&D capabilities over the years and believe that emphasis on R&D has been critical to their success. The company aims to improve market share across all business verticals. Since several sectors in which GAVL operate are largely unorganized, we believe that cost leadership will be a key enabler for GAVL to increase the market share. The company has evolved from cattle feed to an animal protein player. We are POSITIVE on the company’s long-term growth prospects.
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