Godrej Industries - Initiating Coverage
Buy: ₹343
Target: ₹442
Godrej Industries Limited (GIL) is one of the holding companies of the 119 year old Godrej group. It holds ~ 23.8% in Godrej Consumer Products (GCPL), ~56.7% in Godrej Properties (GPL), ~60.8% of Godrej Agrovet (GAVL) and 100% of Natures Basket (NBL). It also has its own oleochemical business, manufacturing and marketing over 100 chemicals for use in more than 24 industries. This consumer centric conglomerate has a significant exposure to emerging economies in Asia, Africa and Latin America either directly with its oleochemicals business with exports to over 80 countries or indirectly through its associates and subsidiaries.
Group philosophy, brand moat, execution excellence to support consistent wealth creation
The Godrej group practices the EVA philosophy, entering into those businesses where they believe they can achieve sustainable leading positions. We believe that a robust management, strong brand equity, consistent innovation and execution excellence would help Godrej to consistently create wealth for its stakeholders.
Value unlocking in GAVL to be a potential upside trigger
GAVL is a diversified agri-business with interests in animal feeds, agri-inputs, palm oil, poultry processing and value added foods. It is also looking to step up its expansion efforts with its recent acquisitions of Creamline Dairy and Astec Lifesciences. GAVL's possible listing is expected to unlock value, offering a potential upside trigger.
Exposure to emerging FMCG markets with GCPL stake
GCPL follows a 3x3 strategy of strengthening presence in Asia, Latin America and Africa across hair care, personal wash and home care segments. A deeper focus on premiumisation of product offerings as well as widening its reach in underpenetrated rural markets is expected to help GCPL in continual growth.
Unique business model, brand strength to help GPL sustain growth
With a unique asset light business model, right mix of industry veterans for partners, and strong brand equity, GPL has exhibited resilience in a flat real estate market as seen in its BKC commercial asset deal and sales of 300 flats in a week in Vikhroli.
| Company | Valuation (₹ mn) | GIL Stake (%) | Holding Company Discount | Total (₹. mn) | Per share (₹.) |
| GCPL | 4,93,773 | 24% | 23% | 91,076 | 271 |
| GPL | 69,830 | 57% | 23% | 30,685 | 91 |
| GAVL | 46,028 | 61% | 0% | 27,985 | 83 |
| Oleochemicals | 8,702 | 100% | 0% | 8,702 | 26 |
| Others (NBL, Creamline, Astec) | 5,746 | 100% | 0% | 5,746 | 17 |
| Enterprise Value | 6,24,079 |
|
| 1,64,194 | 489 |
| Less: Debt |
|
| -15,567 | -46 | |
| Equity Value |
|
| 1,48,627 | 442 |
Please find attached file containing our view on – Godrej Industries
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