GODREJAGRONSEQ3 FY25February 7, 2025

Godrej Agrovet Limited

7,838words
114turns
10analyst exchanges
4executives
Management on call
Nadir Godrej
CHAIRMAN, GODREJ AGROVET LIMITED
Balram S. Yadav
MANAGING DIRECTOR, GODREJ AGROVET LIMITED
S. Varadaraj
CHIEF FINANCIAL OFFICER, GODREJ AGROVET LIMITED
Harmish Desai
PHILLIPCAPITAL (INDIA) PRIVATE LIMITED
Key numbers — 40 extracted
200 basis point
evenue growth was moderate, EBITDA margins (excluding non-recurring items) improved in Q3 FY25 by 200 basis points as compared to Q3 FY24. Coming to the Key Financial and Business Highlights of each of our Busin
4%
ights of each of our Business Segments: In the Animal Feed segment, margins improved sharply from 4% in Q3 FY24 to 6% in Q3 FY25 on account of favorable commodity position. Further, our EBIT/Tn sign
6%
our Business Segments: In the Animal Feed segment, margins improved sharply from 4% in Q3 FY24 to 6% in Q3 FY25 on account of favorable commodity position. Further, our EBIT/Tn significantly improve
45%
FY25 on account of favorable commodity position. Further, our EBIT/Tn significantly improved by 45% from ₹ 1,338 in Q3 FY24 to ₹ 1,925 in Q3 FY25. Q3 FY25 also saw a 10% sequential volume jump driv
₹ 1,338
account of favorable commodity position. Further, our EBIT/Tn significantly improved by 45% from ₹ 1,338 in Q3 FY24 to ₹ 1,925 in Q3 FY25. Q3 FY25 also saw a 10% sequential volume jump driven by Cattle,
₹ 1,925
commodity position. Further, our EBIT/Tn significantly improved by 45% from ₹ 1,338 in Q3 FY24 to ₹ 1,925 in Q3 FY25. Q3 FY25 also saw a 10% sequential volume jump driven by Cattle, Broiler and Layer feed
10%
n significantly improved by 45% from ₹ 1,338 in Q3 FY24 to ₹ 1,925 in Q3 FY25. Q3 FY25 also saw a 10% sequential volume jump driven by Cattle, Broiler and Layer feed while overall volume growth compa
₹ 4 crore
nd subdued crop prices. Astec made significant progress in Q3 FY25, reducing its EBITDA losses to ₹ 4 crores from ₹ 18 crores in the previous quarter and ₹ 17 crores in Q3 FY24. The improved performance wa
₹ 18 crore
prices. Astec made significant progress in Q3 FY25, reducing its EBITDA losses to ₹ 4 crores from ₹ 18 crores in the previous quarter and ₹ 17 crores in Q3 FY24. The improved performance was primarily due t
₹ 17 crore
in Q3 FY25, reducing its EBITDA losses to ₹ 4 crores from ₹ 18 crores in the previous quarter and ₹ 17 crores in Q3 FY24. The improved performance was primarily due to higher volumes in the CDMO business, w
34%
nt revenue and margin. We continue to see positive movement in Value Added Products which reached 34% of total sales, improving both year-on-year and sequentially. In our Poultry business, Q3 FY25
13%
live birds prices. GAVL joint franchise in Bangladesh, ACI Godrej recorded decline in revenues of 13% year-on- year in the Q3 FY25 due to the ongoing economic challenges and political instability in
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Guidance — 20 items
Nadir B. Godrej
opening
“Godrej Agrovet continue to deliver strong profit growth in Q3 FY25 showing a robust performance in the vegetable oil, animal feed and poultry businesses.”
Nadir B. Godrej
opening
“While revenue growth was moderate, EBITDA margins (excluding non-recurring items) improved in Q3 FY25 by 200 basis points as compared to Q3 FY24.”
Nadir B. Godrej
opening
“Coming to the Key Financial and Business Highlights of each of our Business Segments: In the Animal Feed segment, margins improved sharply from 4% in Q3 FY24 to 6% in Q3 FY25 on account of favorable commodity position.”
Nadir B. Godrej
opening
“Further, our EBIT/Tn significantly improved by 45% from ₹ 1,338 in Q3 FY24 to ₹ 1,925 in Q3 FY25.”
Nadir B. Godrej
opening
“Q3 FY25 also saw a 10% sequential volume jump driven by Cattle, Broiler and Layer feed while overall volume growth compared to Q3 FY24 was marginal.”
Nadir B. Godrej
opening
“Our Vegetable Oil segment in Q3 FY25 delivered strong results with significant profit growth driven by higher Crude Palm Oil (CPO) and Palm Kernel Oil (PKO) prices and an improved Oil Extraction Ratio (OER).”
Nadir B. Godrej
opening
“In Q3 FY25, segment revenue and margins in the Standalone Crop Protection business were adversely impacted by lower sales volumes in the in-license category.”
Nadir B. Godrej
opening
“Astec made significant progress in Q3 FY25, reducing its EBITDA losses to ₹ 4 crores from ₹ 18 crores in the previous quarter and ₹ 17 crores in Q3 FY24.”
Nadir B. Godrej
opening
“In Q3 FY25, our Dairy segment saw steady performance in segment revenue and margin.”
Nadir B. Godrej
opening
“In our Poultry business, Q3 FY25 revenue was marginally lower year-on-year primarily due to a deliberate reduction in live birds business volumes and the Company continued its strategic shift towards the branded segment.”
Risks & concerns — 10 flagged
This decline was primarily due to localized stream of events in key markets and subdued crop prices.
— Nadir B. Godrej
The improved performance was primarily due to higher volumes in the CDMO business, which helped offset the impact of lower realization in the key enterprise products.
— Nadir B. Godrej
GAVL joint franchise in Bangladesh, ACI Godrej recorded decline in revenues of 13% year-on- year in the Q3 FY25 due to the ongoing economic challenges and political instability in Bangladesh.
— Nadir B. Godrej
Prices will be very difficult to see right now, but what we can see from China bottom out is over now.
— Arijit Mukherjee
And I said that in one of the answers earlier that even Indonesia, Malaysia are seeing decline in volumes per tree.
— Balram S. Yadav
Price, it will be very difficult to say right now because there will be too much of competition, what is the seasonality, but for us this is important that the volumes are coming back.
— Arijit Mukherjee
I think we are bit cautious on the enterprise business.
— Balram S. Yadav
So, we'll be extremely cautious in our inventory management, watch the prices and do the business on positive contribution only.
— Balram S. Yadav
Second is on the dairy business, how is the trend in the milk procurement price for both us and the industry, because we can say healthy plus, price was under pressure?
— Jignesh Kamani
It is mostly into the innovators who are working with and I will say that commercialization date is very difficult to say because there is a requirement in terms of R&D followed by say other compliance issues of registration, data generation.
— Arijit Mukherjee
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Q&A — 10 exchanges
Q
Good afternoon and thank you so much. So, my first question pertains to Astec LifeSciences. We had expected a significant increase in CDMO revenues this year. I believe in the past we've guided to about 400 crores for the year, about 50% growth. So, just in the context of how the year has unfolded, if you could please update us on what's your current expectations are both for the remainder of this year and then for FY26, please?
Arijit Mukherjee
Abhijit, so this year in fact if you see the guidance earlier, we have told the CDMO year-on-year we will grow by 30% to 40%. So, we stick to that. This year has been less, one, because of price correction and some molecules have not come because of more of a market situation. In terms of FY26, we have done the meeting with most of the CDMO players. So, as of now, which we feel almost all the projects are coming back to the normal scale, in fact the volume projections we are getting till date is the normal volume projections we see. Prices will be very difficult to see right now, but what we c
Q
Thank you, sir, for taking my question. Sir, can you just delve deeper into, you said that there is a lot of materials taken back due to hygiene reason in the crop protection segment, can you delve a little bit deeper into that what exactly happened?
Balram S. Yadav
Yes. So, the issue is that sometimes the farmer does not use the sprays because our sprays are also a function of the crop condition. So, when there is no pest, why do you need pesticide? I think that was one of the reasons particularly in chillies that a year before the last star product, which is in-licensing product, the sales absolutely dropped significantly just because there was no requirement of that spray. So from agri point of view, farmer point of view, it was good news because the prices of chilli are low, and this chemical is very expensive. So, it brought down the cost of producti
Q
My first question is pertaining to dairy.
Balram S. Yadav
Can you please be louder? Sir, my first query is regards to dairy. Could you call out why did we have a slightly seasonally sequentially tepid quarter and how do you expect the margin trajectory to play out for fourth quarter and the next year? And also, if you could call out what is the direct procurement there and sales? So, I would say in the first nine-months, we have grown the revenue by about 1.7%, which is flat, but there is a significant improvement in EBITDA; EBITDA has grown by about 70%, but as far as Q3 is concerned, the revenues grew by 1% and EBITDA dropped by 5.4% as compared to
Q
On plantation of palm oil, how it is increasing for us, because in the last three years we have not seen significant increase for us?
Management
Sumant, can you please be a little bit louder? I am talking about can you talk about the palm oil plantation for us, how it is growing? And what my observation is the way we are doing plantation or data we got, FFB arrival is still not growing whatever plantation we are doing. Yes. So, let me just tell you, I think we are following the pattern what palm is following all over the world. And I said that in one of the answers earlier that even Indonesia, Malaysia are seeing decline in volumes per tree. So, I think that may be a natural phenomenon. My sense is that it will improve again. But havin
Q
Yes, thank you for the follow-up. Just to delve a little bit further on Astec, so at the beginning of the call, if I heard you correctly, I think Arijit mentioned 30% to 40% growth for FY25 from the CDMO business, but later on I think it was mentioned that we might only be flattish. So, if you could please just clarify exactly what the expectation is or how much order we actually have in hand for this year?
Balram S. Yadav
So, let me just clarify because I think since there's some sound issue, so actually the CAGR from FY22 to FY25 in CDMO on a small base was 42%. Okay? FY22 to FY25? Yes. But this year CDMO there will be no growth, it will be flat and next year we are expecting, if you ask me today 30% (+/-2%) to (+/-3%) will definitely happen, but if you ask me two months later, I can tell you a more accurate number because now we are talking not about expectations, but the order we will get, we will talk about that only. Okay. So, just to confirm, for FY25, we expect it to remain around 270 crores, which is wh
Q
So, if you think about the volume, you can see on the animal feed, it's still grew by just 1.8%, though it is much better compared to what we have done in the first half. So, how is the current trend in the volume across the three segments, do you think that cattle feed is concerned earlier where the farmer was not investing because of lower milk price and everything and there was also challenging in the potential there, how is the current scenario? I think that volume growth on YoY basis looks healthy for the Q4 and the FY26.
Balram S. Yadav
So, Q4 will be even better than Q3 both in terms of profitability and in terms of volume growth. My sense is that milk prices are likely to remain high in the coming quarters and layer was one area where the placements were less and that is why because if there is no bird, where will we sell the feed, that was one of the issues, but layer feed, fish feed, both these feeds are likely to see a big jump in volumes next year, because there is a lot of placement which has happened in last quarter and this quarter the placement is still happening. So, I am confident that we will improve in Q4 and fu
Q
Hi, thanks for the opportunity. My first question is on Astec. Just like two, three months back in the second quarter call, we've given guidance of about 400 crores of CDMO revenue for FY25. While just in the matter of the last 2-3 months, what has happened is that we are cutting our FY25 revenue guidance by 30%?
Management
Maybe there are three particular CDMOs which goes to almost US, Europe and Japan and because of the larger inventory it has a combination of both fungicide and herbicide, because of the larger market inventory, they are cutting down on their projections. So, that is the main reason for this Q4, because initially it got delayed because this production usually starts from Q2, but it delayed to Q3, then again there is a delay. It is working because the order inventories are there in the market. Right. And on the enterprise side, like you mentioned that we are seeing positive contribution margins.
Q
Hi. My question is pertaining to the CDMO partner Astec. What's the kind of pipeline of CDMO that exist right now and what kind of molecules do we expect to add in the next few quarters?
Arijit Mukherjee
In pipeline, we have around 12 projects in different stages of R&D. It is mostly into the innovators who are working with and I will say that commercialization date is very difficult to say because there is a requirement in terms of R&D followed by say other compliance issues of registration, data generation. But I think next three to four quarters you will see one-by-one some projects are coming on line because commercialization is not a problem because we have sufficient assets with us where the commercialization will happen. Now, it is a matter of R&D, then slowly, the registration is comin
Q
Hello. Sir, thanks again for the opportunity. Just two more follow-ups. One is, sir, do you have any visibility of when the GCPL pet food products business is likely to commence and what progress if we've made anything in that front?
Balram S. Yadav
I can tell you about the second question. So, I think the pilot plant, etc., whatever our responsibility was of the pilot plant, I think it will be ready in a few weeks’ time where most of the experiments can be done and lot of production for marketing trials can be taken. The full- fledged 35,000 to 40,000 ton per annum plant will only come towards the end of FY26. Okay, okay. So, basically, sir, we had been asked by them to make a pilot plant and so that they can start their R&D experiments, and we have done our bit and handed over to them, so then the next one year will go into a testing ph
Q
Thank you. I hope we've been able to answer all your questions. If you have any further questions or would like to know more about the company, we would be happy to be of assistance. Stay safe and stay healthy. Thank you once again for taking the time to join us on this call.
Management
Speaking time
Balram S. Yadav
40
Aejas Lakhani
18
Moderator
12
Abhijit
10
Arijit Mukherjee
6
Aman Vora
6
Rikin Shah
5
Ashwin Shetty
4
Sumant Kumar
4
Jignesh Kamani
4
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Opening remarks
Harmish Desai
Thank you, Ms. Khan. Good afternoon, everyone, and thank you for joining us on the Godrej Agrovet Q3 FY25 Earnings Conference Call. From the Management, we have Mr. Nadir Godrej – Chairman, Mr. Balram S. Yadav – Managing Director, Mr. S. Varadaraj – Chief Financial Officer and Mr. Arijit Mukherjee – Chief Operating Officer, Astec LifeSciences. We would like to begin the call with “Brief Opening Remarks from the Management, following which we will open the forum for a “Q&A Session.” Before we start, I would like to point out that some statements made in today’s call may be forward-looking and a disclaimer to that effect has been included in the earnings presentation shared with you earlier. I would now like to invite “Mr. Nadir Godrej to make the Initial Remarks.” Thank you.
Nadir B. Godrej
Hello. Godrej Agrovet continue to deliver strong profit growth in Q3 FY25 showing a robust performance in the vegetable oil, animal feed and poultry businesses. While revenue growth was moderate, EBITDA margins (excluding non-recurring items) improved in Q3 FY25 by 200 basis points as compared to Q3 FY24. Coming to the Key Financial and Business Highlights of each of our Business Segments: In the Animal Feed segment, margins improved sharply from 4% in Q3 FY24 to 6% in Q3 FY25 on account of favorable commodity position. Further, our EBIT/Tn significantly improved by 45% from ₹ 1,338 in Q3 FY24 to ₹ 1,925 in Q3 FY25. Q3 FY25 also saw a 10% sequential volume jump driven by Cattle, Broiler and Layer feed while overall volume growth compared to Q3 FY24 was marginal. Our Vegetable Oil segment in Q3 FY25 delivered strong results with significant profit growth driven by higher Crude Palm Oil (CPO) and Palm Kernel Oil (PKO) prices and an improved Oil Extraction Ratio (OER). This also reflected
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