GODREJAGRO - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 05 Nov 25, 7:43 am

Fundamental Rating: 3.8

📊 Financial Overview: Godrej Agrovet Ltd (GODREJAGRO) has a solid market cap of ₹12,742 Cr and a manageable debt-to-equity ratio of 0.25. The company posted a strong PAT of ₹169 Cr this quarter, up from ₹68.1 Cr, reflecting a healthy 23.8% profit growth. Return metrics are impressive, with ROCE at 24.4% and ROE at 20.9%, indicating efficient capital deployment and profitability.

💹 Valuation Metrics: The stock trades at a P/E of 23.8, slightly above the industry average of 18.6, suggesting moderate premium valuation. With a Book Value of ₹134, the P/B ratio is ~4.94. The PEG ratio of 2.01 indicates that the stock may be overvalued relative to its growth. Dividend yield stands at a respectable 1.66%.

🌾 Business Model & Competitive Advantage: Godrej Agrovet operates across animal feed, crop protection, dairy, and oil palm segments. Its diversified portfolio, strong brand equity, and rural distribution network provide a competitive edge. The company benefits from rising demand for agri-inputs and food products in India’s growing rural economy.

📈 Technical Indicators: RSI at 40.8 suggests neutral-to-weak momentum. MACD at -13.3 indicates bearish sentiment. The stock is trading below both its 50 DMA (₹703) and 200 DMA (₹734), signaling short-term weakness. Volume is slightly below average, indicating subdued investor interest.

🎯 Entry Zone: A favorable entry range would be around ₹645–₹660, offering a better margin of safety and aligning with recent support levels.

🕰️ Long-Term Holding Guidance: GODREJAGRO is a fundamentally sound agri-business with strong returns and a diversified model. Long-term investors can consider accumulating on dips for exposure to India’s rural consumption and food security themes.

✅ Positive

• Strong ROCE (24.4%) and ROE (20.9%) reflect efficient capital usage.
• EPS of ₹27.8 supports consistent earnings performance.
• Quarterly PAT growth of 23.8% indicates operational strength.
• DII holding increased by 0.21%, showing domestic institutional confidence.

⚠️ Limitation

• PEG ratio of 2.01 suggests valuation may exceed growth expectations.
• Stock trading below key moving averages indicates technical weakness.
• Dividend yield of 1.66% is modest for income-focused investors.

📉 Company Negative News

• FII holding declined by 0.06%, signaling cautious foreign sentiment.
• MACD and RSI suggest short-term bearish momentum.

📈 Company Positive News

• Strong quarterly earnings and diversified business model.
• Stock has gained 7.54% from its 52-week low of ₹645.

🏭 Industry

• Agri-business sector benefits from rising rural demand and food security initiatives.
• Industry P/E of 18.6 reflects moderate valuation across peers.

🧾 Conclusion

• Godrej Agrovet is a well-diversified agri-business with strong fundamentals and growth potential.
• Valuation is slightly stretched; consider accumulating near ₹645–₹660.
• Ideal for long-term investors seeking exposure to India’s rural and agri-economy growth story.