Godrej Agrovet (GODREJAGRO)

FairStock Score: 58/100 — STEADY

Score breakdown: P/E: 1/3 · ROCE: 1/2 · Growth: 2/2 · Dividend: 0/1

Key Financials

Strengths

• ROE of 18.43% and ROCE of 16.59% demonstrate strong capital efficiency.
• Piotroski F-Score of 8/9 and Altman Z-Score of 4.11 indicate solid financial health and low near-term distress risk.
• High promoter holding of 67.65% aligns management interests with minority shareholders.
• Free cash flow of ₹887 Cr provides ample internal funding for debt reduction, capex, or dividends.
• Dividend yield of 1.72% offers a modest income cushion.

Concerns

• Valuation is expensive: P/E 26.70 and P/B 4.90, with negative margin of safety of -153.95% versus Graham Number ₹252.11.
• Growth is moderate: profit growth 5.44% and sales growth 6.93% (5yr CAGR 8.41%) do not justify the multiple.
• EV/EBITDA at 134.70 is extremely stretched, signaling expensive relative to operating earnings.
• Debt/equity of 1.19 adds leverage risk to a business with modest growth.

AI Analysis

Let me start with what I like. Godrej Agrovet generates an ROE of 18.43% and an ROCE of 16.59%. The Piotroski score is 8/9, and the Altman Z-score of 4.11 tells me bankruptcy risk is low. Promoter holding of 67.65% aligns owners and managers. Free cash flow of ₹887 Cr is substantial. This looks like a well-run, steady compounder. But a wonderful business can still be a poor investment if the price is wrong. At ₹606.70, the P/E is 26.70 and P/B is 4.90. Graham would ask: what am I getting for that? Sales grew only 6.93%, profit grew 5.44%, and the five-year revenue CAGR is 8.41%. Those are single-digit, steady numbers, not enough to justify a high multiple. The Graham Number is ₹252.11; at today's price, I have no margin of safety—it is negative 153.95%. The EV/EBITDA of 134.70 is stretched, and debt/equity of 1.19 is not conservative. The DCF figure of ₹2,168.85 is optimistic based on historical growth; I prefer the hard test of Graham. This is a quality stalwart, not a fast grower. I would not sell my position in panic, but I would not buy new shares at this valuation. I want growth closer to 5-7% at a price that gives me a cushion. For a retail investor, patience is an asset. Watch whether the company converts its strong cash flow into steady earnings growth or merely maintains the status quo. If the market offers the stock near a value-investing price, the quality here would make it attractive. Until then, I keep it on my watchlist, not in my wallet.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer