Godrej Agrovet Ltd (NSE:GODREJAGRO) Q4 2025 Earnings Call Highlights: Record Profitability Amid ...

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Tue, May 6, 2025, 1:00 AM 4 min read

EBITDA Margin: Improved by 110 basis points in FY25 compared to FY24.
Animal Feed Segment Margin: Increased from 4.6% in FY24 to 6.1% in FY25.
EBIT per MT (Animal Feed): Increased by 28% from INR 1,542 in FY24 to INR 1,973 in FY25.
Vegetable Oil Segment: Significant improvement in revenue and results for Q4 '25 and FY25.
Crop Protection Segment Margin: Achieved 40% in FY25, showing impressive growth over FY24.
Dairy Segment Profitability: Improved in FY25 due to operational efficiencies and favorable milk spread.
Value-Added Products (Dairy): Contributed 37% of total sales.
Poultry Business: Q4 FY25 earnings and margins declined due to lower volume of live bird category.
ACI Godrej (Bangladesh Joint Venture): Revenue declined by 13% year on year in FY25.

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Release Date: May 05, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Godrej Agrovet Ltd (NSE:GODREJAGRO) achieved its highest ever profitability in FY25, driven by strong performances in the Crop Protection and Vegetable Oil segments.
EBITDA margin improved by 110 basis points year-on-year, excluding nonrecurring items, despite flat revenue.
The company is committed to sustainability, with 81% of energy consumption from renewable sources and being water positive.
Animal Feed segment saw a significant margin improvement from 4.6% in FY24 to 6.1% in FY25 due to favorable commodity positions and cost optimization.
The Vegetable Oil segment benefited from increased crude palm oil and palm kernel oil prices, leading to significant revenue and profit growth.

Negative Points

Astec Life Sciences faced challenges with lower uptake in the CDMO business and a sharp decline in enterprise product prices.
The Dairy segment's Q4 performance was impacted by increased procurement prices, affecting profitability.
Poultry business earnings and margins declined in Q4 FY25 due to lower live bird volumes and higher input costs.
The joint venture in Bangladesh, ACI Godrej, recorded a 13% revenue decline due to economic challenges and political instability.
The company faces challenges in maintaining high margins in the Crop Protection segment, with expectations of a potential drop from the current 40% EBIT level.

Q & A Highlights

Q: What are the future prospects for Astec Life Sciences given the challenges faced in the past year? A: Arijit Mukherjee, Chief Operating Officer of Astec Life Sciences, explained that the challenges were due to high-priced inventory in the enterprise section. The company has liquidated these inventories, and with fresh raw materials, they expect positive contributions from the business. They anticipate a 35% growth in contract manufacturing over the next couple of years, with a focus on innovator space and new molecules.

Q: Can you provide guidance on the growth numbers for the contract manufacturing business? A: Arijit Mukherjee stated that they expect a 35% year-on-year growth in the contract manufacturing business for the next couple of years.

Q: How should we think about gross margins in the Astec enterprise business for FY26? A: Arijit Mukherjee mentioned that within the enterprise business, some molecules will show good growth, expecting around 15% to 20% growth in volume. However, some molecules remain under stress. Gross margins are expected to be around 20% to 23%.

Q: What is the outlook for the various business segments for the upcoming financial year? A: Balram Yadav, Managing Director, stated that they expect 16% to 18% top-line growth driven by volume growth, particularly in Crop Protection, Animal Feed, and Astec Life Sciences. Profitability is also expected to grow by 16% to 18%, primarily due to loss reduction in Astec Life Sciences.

Q: How do you expect the Animal Feed segment to perform in FY26? A: Balram Yadav explained that the segment benefited from favorable raw material positions and government policies. They expect EBIT per ton to remain between INR1,900 to INR2,000, with potential for margin maintenance or expansion.

Q: What is the outlook for the Vegetable Oil segment, and how has forward integration impacted margins? A: Balram Yadav noted that while palm oil prices are softening, palm kernel oil prices remain strong. Forward integration through refining has added 1.25% to profitability, with further investments expected to add another 1% to 1.2%.

Q: How is the Poultry business transitioning, and what are the expectations for FY26? A: Balram Yadav stated that the focus is on reducing exposure to live birds and increasing branded product sales. The expectation is for improved margins and reduced volatility in the segment.

Q: What are the plans for the Dairy segment in FY26? A: The company aims for 10% volume growth, with value-added products contributing over 40% of sales. They expect EBITDA margins to expand from 5% to 6%-7%.

Q: How is Godrej Agrovet addressing the volatility and predictability of its business portfolio? A: Balram Yadav acknowledged the need for portfolio consolidation and restructuring. The company is working with consultants to explore options and has acquired full ownership of certain joint ventures to facilitate potential restructuring.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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