Godrej Agrovet Ltd's consolidated revenue for Q4FY18 came in at Rs1,194.72cr, up by 16.1% yoy. The operating profit for the quarter came in at Rs74.15cr, which increased by 17% yoy. The EBITDA remained stable at 6.2% in Q4FY18 with marginal increase by ~5bps. The adjusted consolidated net profit after tax (excluding non-recurring items, exceptional items and share of profit/loss from non-controlling entities) stood at Rs36.04cr for Q4FY18, up by 22.05% yoy. The consolidated revenue, operating profit and net profit of the company for FY18 are in-line with street estimates.
• In Q4FY18, consolidated revenue growth was driven by higher sales in the animal feed and crop protection businesses.
• The company’s gross profit margin increased by ~60bps yoy to 23.2% in Q4FY18.
• Other expenses increased significantly by 25.3% yoy to Rs135.38cr in Q4FY18. Despite increase in gross margin, there was no major improvement in the EBITDA margin of the company and also significant dip in the net profit of the company.
• The effective tax rate of the company also increased to 32.5% in FY18 as against 27.1% in FY17 leading to further drop in the net profits.
• The Board of Directors have recommended a final dividend of Rs4.50 per share of face value Rs10 each.
• Animal feed segment revenue increased by 12.8% yoy to Rs682.66cr in Q4FY18. It witnessed a volume growth of 18.9% driven by momentum in cattle feed and layer feed during the quarter. Broiler feed volume decline was arrested in FY18, after almost 4 years of de-growth. Also, due to lower commodity prices, the realization levels remain subdued leading to lower level of revenue growth. The segment EBIT increased marginally by 9.2% to Rs48.79cr in Q4FY18 with a drop in EBIT margin by ~30bps to 7.1% and segment ROCE of 18.2% in Q4FY18. Its focus remains on increasing market share and distribution reach in all the feed categories.
• Godrej Agrovet is the largest domestic producer of crude palm oil and palm kernel oil. Segment revenue from vegetable oil segment decreased by 7.7% yoy to Rs51.72cr in Q4FY18. The segment EBIT declined by 38% to Rs3.99cr in Q4FY18 with a significant drop in EBIT margin by ~378bps to 7.7% and segment ROCE of 1.9% in Q4FY18. Fresh fruit bunch arrival volume growth was at 21% in FY18 as compared to last year. Proactive import duty tweaks by the government augurs well for the business (import duty for crude palm oil increased from 30% to 44% in early March 2018).
• Revenue from crop protection business increased significantly by 65.8% yoy to Rs187.17cr in Q4FY18. It also witnessed a strong growth of 55.8% in export sales through Astec Lifesciences in FY18. The segment EBIT also increased by 75.2% to Rs35.09cr in Q4FY18 with a rise in EBIT margin by ~100bps to 18.7% and segment ROCE of 5.8% in Q4FY18. The segment witnessed growth despite the adverse impact on revenue on account of GST. It witnessed traction in herbicides and fungicides categories in FY18. It has incurred capex to de-bottleneck existing capacities consisting new intermediates and backward integrated products. The projects are expected to go live in FY19.
• Dairy segment revenue increased by 6.4% yoy to Rs274.2cr in Q4FY18. However, the segment EBIT reported a loss of Rs1.67cr in Q4FY18 as against a profit of Rs1.73cr in Q4FY17. Profitability was impacted by adverse milk prices and high provisioning costs due to poor butter prices during the financial year. The company’s focus remains on strengthening the Jersey brand with continued marketing investment in the states having its presence.
• Revenue under ACI Godrej Agrovet Private Limited, Bangladesh increased by 12% during FY18.
• Total debt of the company (long term and short term) reduced to Rs402.8cr as on March 31, 2018 as against Rs659.81cr as on March 31, 2017. This is on account of utilization of IPO proceeds to the extent of Rs250cr for reduction of debt and short term working capital borrowings.
Godrej Agrovet Ltd is currently trading at Rs. 674, down by 11.5 points or 1.68% from its previous closing of Rs. 685.50 on the BSE.
The scrip opened at Rs. 694.40 and has touched a high and low of Rs. 694.40 and Rs. 671.50 respectively. So far 2,09,081 (NSE+BSE) shares were traded on the counter. The stock is currently trading above its 50 DMA.
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