The brokerage firm has also raised its fair value to ₹870 from ₹840 earlier. This target implies a potential upside of 30% from Monday’s closing levels.
With Tuesday’s gain, the stock is now 20% away from its 52-week high of ₹877.85, which it had hit in July last year.
Kotak said it upgraded the rating after what it considers an unwarranted sell-off in the stock following the company’s March quarter results, which were subdued but in line with expectations for a seasonally slow quarter.
Godrej Agrovet reported subdued revenues and EBITDA for Q4, as Kotak had expected, as margin pressures in the dairy and poultry segments offset strength in the palm oil segment. EBITDA for the quarter was down marginally, as a 100% on-year increase in EBIT from vegetable oil was offset by declines across most other businesses.
However, interest expenses decreased by 16% YoY as the company did well in terms of cash generation.
This, combined with modestly higher other income and a favorable swing in minority interest, helped net income grow 24% YoY and top Kotak’s estimate by 12.5%. For the full year FY25, net income grew by 19% YoY; adjusted for certain one-time tax impacts, it stood higher by 22% YoY.
On the earnings call, management had guided for 16-18% growth in revenue and earnings for financial year 2026.
Kotak wrote in its note that the outlook for FY26 remains positive, and measures to simplify the holding structure could also be beneficial.
The brokerage continues to see healthy long-term growth potential in the company’s businesses.
Management’s plans to simplify the holding structure could act as an additional trigger for value unlocking, the brokerage said. Capital expenditure requirements are limited for the foreseeable future, which should support healthy free cash flow (FCF) generation and improving return ratios.
According to Kotak, the risk-reward profile appears favorable at current valuations.
Shares of Godrej Agrovet are currently trading 4.87% lower at ₹699.45. Despite this gain, the stock is down 5.40% in 2025 so far.
