Release Date: October 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Godrej Agrovet Ltd (NSE:GODREJAGRO, Financial) reported an improvement in EBITDA margins by 70 bps in Q2 FY 2025, excluding non-recurring items.
- The animal feed segment saw a significant increase in segment margins from 4.6% in Q2 FY 2024 to 5.9% in Q2 FY 2025 due to favorable commodity positions and cost optimization.
- The standalone crop protection segment experienced strong growth with segment margins improving from 30% in Q2 FY 2024 to 43% in Q2 FY 2025.
- The dairy segment demonstrated margin expansion with EBITDA margins improving by 140 bps, driven by operational efficiency gains.
- The company is confident in achieving a 50% growth in the CDMO business over last year, with expectations of reaching INR 400 crores in revenue.
Negative Points
- Astec LifeSciences faced pricing pressures and lower volumes in the CDMO category, adversely affecting revenue and margins.
- The poultry segment recorded a decline in revenue due to lower volumes in the live bird business and an unfavorable channel and product mix.
- The vegetable oil segment revenues were flat due to lower fresh fruit bunch arrivals, despite higher realizations of end products.
- The joint venture in Bangladesh, ACI Godrej, saw a 6% decline in revenues year-on-year due to volume contraction and pricing pressures.
- The fish feed segment experienced a tough time due to erratic rainfall, leading to a degrowth in the first half of the year.
Q & A Highlights
Q: What are the company's plans for succession following Mr. Balram Yadav's retirement?
A: Nadir Godrej, Non-Executive Chairman of the Board, stated that the company has good processes in place for succession planning. They are currently interviewing candidates and expect a smooth transition, similar to other CEO transitions within the Godrej Group.
Q: Regarding Astec LifeSciences, have you found a replacement for Mr. Anurag Roy, and what is the outlook for the CDMO business?
A: Balram Yadav, Managing Director, mentioned that they are focusing on augmenting the CDMO team with specialist talent and consultants. They expect a 50% growth in CDMO revenue over last year, with H2 expected to catch up due to changes in cropping seasons and buyer behavior.
Q: Can you provide insights into the fish feed segment and the dairy business's value-added products?
A: Balram Yadav explained that fish feed has faced challenges due to erratic rainfall, leading to a degrowth in the first half. However, they expect improvement in the next season. For the dairy business, the value-added products' contribution decreased due to seasonality but is expected to rise again, finishing the year at about 40%.
Q: What is the current status of the herbicide plant and its contribution to revenues?
A: Nadir Godrej noted that the herbicide plant has been commissioned on time and will play a role in achieving revenue targets. However, full capacity utilization is expected only by FY '26, with current utilization at around 30%.
Q: How is the company addressing the increased debt levels at Astec LifeSciences?
A: Balram Yadav stated that they are hopeful for improvement and do not plan any capital raise at the moment. They are cautious about the situation, given the competitive pressures from China, and are focusing on operational improvements.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
