Godrej Industries has target of Rs 225: Rajen Shah

Shah told CNBC-TV18, "In Godrej Industries I think 50% upside in the next one year is easily possible. This company has got variety of business, the main business being the chemical business which is doing very well then they have this agrovet business, they hold about 75% stake in Godrej Agrovet and Angel is very bullish on the agri space and Godrej Agrovet—last year ended March 2010—reported a turnover of about Rs 1,650 crore. That is growing at about 20%, so this year it will be about Rs 2,000 crore of turnovers from Godrej Agrovet. That means in Godrej Industries it is Rs 1,500 crore of turnover because they are holding 75% stake. So that is Rs 1,500 crore of turnovers. If you value this at one time sales which can be easily valued at that means the value of its stake in Godrej Agrovet is Rs 1,500 crore."

"They hold about 25% stake in Godrej Consumer that is doing very well. We have a target of about Rs 310 for Godrej Consumer and we all know what is happening in the international market, they are very aggressive on buying the African and the Asia businesses of many of the companies and I think Godrej Consumer since they are holding about 25% stake, the value of that stake works out to roughly around - since the marketcap of Godrej Consumer is around 8,500 crore - Rs 2,100 crore or so and it holds 69% stake in Godrej Properties."

"Interesting thing is that Godrej Properties has got into a tie-up with the parent company to develop 1,800 acres of land. Now this is going to happen over the next two years i.e. the development will start after two years but this project will be a twenty year project. 1,800 acre is a huge project and that is going to generate business for Godrej Properties for the next twenty years. So it doesn't need to look out for anywhere else for business because the Ahmedabad project and the Vikhroli project are enough to take care of this company for the next 15-20 years."

"I think Godrej Properties—now Godrej Industries has got 69% stake in Godrej Properties and with this company likely to do very well the value of the stake—will be significantly higher than what it is currently valued at. The market is valuing at Rs 2,500 crore, I think in the next three years, it should be anywhere around Rs 5,000 crore or so. So if you add up all these things and plus the Godrej Hershey business which is also growing at more than 30%."

"If you add all the business, we arrive at a bare minimum valuation of at least about Rs 7,000 crore for Godrej Industries whereas the marketcap of this company is about Rs 4,800 crore. So there is a significant upside possible at least 40% upside possible in the next one year based on the current scenario but if this matures like the Godrej Agrovet is doing well, Godrej Industries is doing well, Godrej Properties is doing well, I think this company has got all the potential to go upto the levels, which it touched at 21,000 levels, a price of almost Rs 500 over the next three years. So we are extremely bullish on Godrej Industries and a target is Rs 225 in a year's timeframe."

"This company bought back 22 lakh shares at an average price of Rs 140 about a year back. I have been tracking Godrej soaps—when Godrej Consumers and Godrej Industries were one entity Godrej Soaps—I have seen Mr Adi Godrej reward shareholders and I think the creation of shareholder value for him is at the topmost of his mind except for this Godrej Properties where shareholders were not able to make that much money on the listing. But I think this group has time and again rewarded and I think Godrej Industries when they buy back 22 lakh shares at Rs 140, I don't think we need to doubt getting into this stock at Rs 150."

Source : Moneycontrol Video link here

Disclosure : I hold