Release Date: May 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Godrej Agrovet Ltd (BOM:540743, Financial) recorded consolidated revenue from operations of INR9,561 crore in fiscal year '24, a slight increase from INR9,374 crore in fiscal year '23.
- Profit before tax improved by 55% to INR434 crore compared to INR280 crore in fiscal year '23, driven by strong performance in the domestic crop protection business and structural turnaround of the dairy business.
- The company achieved significant market share gains in Animal Feed and robust volumes and margin growth in branded products in the Poultry business.
- Godrej Agrovet Ltd (BOM:540743) made substantial progress towards sustainability targets, with 77% of energy consumption from renewable sources and being a water-positive company.
- The standalone crop protection segment witnessed strong growth, with a top-line increase of 37% and a segment margin of 31% for fiscal year '24.
Negative Points
- Vegetable Oil segment margins were adversely impacted by lower fresh fruit bunch arrival and lower sales volume due to lower inventory of palm kernel oil.
- Fresh fruit bunch volume growth of 6% was offset by lower crude palm oil and palm kernel oil prices, resulting in lower segment margins.
- Astec LifeSciences' full-year top line and segment margin were severely impacted by sluggish demand for key enterprise products and a sharp drop in realizations.
- The Poultry segment saw a decline in revenues due to lower volumes in the live bird business, despite strong growth in profitability.
- Unallocable expenses within the segment financials increased significantly, partly due to the absence of land sale income that was netted off in the previous year.
Q & A Highlights
Godrej Agrovet Ltd (BOM:540743) Q4 FY24 Earnings Call Highlights
Q: How are fishmeal prices affecting the fish feed business, and are there any alternatives being used?
A: Fishmeal prices were high but are now softening. No insect meal is used; only fishmeal is used in formulations. The company is well-placed if prices fall. (Balram Yadav, Managing Director)
Q: What is the outlook for palm oil prices in FY25?
A: Palm oil prices have stabilized and may rise slightly. Indian prices depend on import duties, which could increase post-elections due to a bumper red seed crop. (Nadir Godrej, Non-Executive Chairman)
Q: Any updates on potential corporate restructuring to enhance shareholder value?
A: No updates currently. Any developments will be communicated at the appropriate time. (Balram Yadav, Managing Director)
Q: How are new products in Astec LifeSciences performing, and what is the outlook for FY25?
A: New products are being commercialized and will contribute to financial performance from July-August onwards. CDMO business is expected to maintain strong growth, while enterprise business remains under stress. (Anurag Roy, CEO of Astec LifeSciences)
Q: What structural changes have been made in the dairy business to improve performance?
A: Initiatives include improving operational efficiencies, rationalizing SKUs, and focusing on value-added products. The business has seen significant margin improvements and is expected to continue this trend. (Balram Yadav, Managing Director)
Q: What is the growth outlook for the Animal Feed segment, particularly for cattle, fish, and poultry feed?
A: Cattle and fish feed are expected to grow in double digits, while poultry feed will maintain volumes. Margins have been improving steadily and are expected to continue this trend. (Balram Yadav, Managing Director)
Q: Can you elaborate on the trading revenues in the oil palm business?
A: Trading revenues come from refining and selling crude palm oil to utilize refinery capacity. This strategy will continue until in-house production matches capacity. (Balram Yadav, Managing Director)
Q: What is the revenue breakdown and growth outlook for the Godrej Tyson business?
A: The focus is on branded products, with Yummiez and Real Good Chicken growing by 13% and 15.6%, respectively. The branded segment is expected to continue strong growth. (Balram Yadav, Managing Director)
Q: What are the CapEx plans for FY25 for Godrej Agrovet and Astec LifeSciences?
A: Godrej Agrovet plans to invest INR250-300 crores, focusing on capacity enhancements and distribution. Astec LifeSciences will review CapEx needs based on CDMO business growth. (Balram Yadav, Managing Director)
Q: Are there any plans for equity raising for Astec LifeSciences given the current cash flow situation?
A: No plans for equity raising. The company believes the industry has bottomed out and expects an upward trend. Debt levels are manageable. (Balram Yadav, Managing Director)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
