Godrej Indus -Buy

Godrej Indus (Cmp 192) buy with stop loss of 187 for for target price 207

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

Godrej Inds Q3 net up; bullish on property development biz

Godrej Industries has declared its third quarter results of FY10. Its consolidated net profit increased 769.05% to Rs 43.8 crore versus Rs 5.04 crore (YoY). Its consolidated net sales went up 7.44% to Rs 852 crore from Rs 793 crore (YoY).

In an interview with CNBC-TV18, Adi Godrej, Chairman and Managing Director, Godrej Industries, speaks about the results and his outlook for the company.

Here is a verbatim transcript of the exclusive interview with Adi Godrej on CNBC-TV18. Also watch the accompanying video.

Q: Take us through your numbers this quarter? What went right this quarter for you?

A: You must remember that the October-December quarter last year was one of the worst quarters in India’s recent economic history, so it was a poor quarter. All our businesses have recovered; all the businesses under the Godrej Industries have been doing well. Godrej Consumer Products especially has done exceedingly well and Godrej Industries owns about 25% of Godrej Consumer Products, so that adds considerably also to the bottom-line. I would say that the excellent results are a combination of all the businesses doing much better than last year.

Q: For Godrej Consumer Products, the numbers are very good and you did complete your 49% acquisition in Godrej Sara Lee, what is the prognosis for the consumer business going forward? Now, that you have completed this acquisition, how does it benefit you in terms of synergies going forward?

A: The consumer business is doing exceedingly well. Godrej Consumer Products posted a sales growth of 53% in Q3 and PAT growth of 112%, the business continues to do well. We must remember that the topline growth is a little muted than the earlier quarters because now there is only volume growth reflecting in value growth, earlier it was both volume and price reflecting, so now all growth is more or less volume growth. But the profit growth continues to be exceedingly good and we expect that business to continue to do well. We look forward to considerable inorganic growth also in the next quarter and the year to come.

Q: Has there been any impact in terms of your margins from the agri business front because I believe feed stock costs have increased a little bit?

A: Agri businesses have done much better than last year and they continue to do well.

Q: What about your chemical business and what the outlook there because that is the one that has broken back into the black, last time you had a loss of about Rs 24 crore, this time you have gone back into a wee bit of profit, this is pretty much at the EBITDA level at about Rs 6.3 crore?

A: The chemical business has turned around, last year was a very bad year for chemical business, raw material prices were very high and global demands were very export oriented. Global demand was down last year, it’s picked up, and profit margins have improved. Going forward, we expect the pick up to be even better, so that business has certainly turned around and last year was exceptionally bad year for the chemical business.

Q: Post your Godrej Properties IPO everyone is interested on your newest baby form the real estate space, what sort of a contribution for Godrej Industries as a whole are we looking at in the ensuing quarters from the real estate business?

A: Godrej Properties will play an increasingly strong role in Godrej Industries because Godrej Industries continues to hold 70% in Godrej Properties. It has a tremendous future, I am talking of a medium to long term future, affordable hosing is to my mind going to be the big news story of the next decade, its growth is likely to be very rapid, everything is falling into place for affordable housing to grow smartly; the demand is there, costs are reasonable and mortgages are available freely and at reasonable rates.

I also expect that the government will encourage affordable hosing through interest subvention and mortgage rates. So, we are extremely bullish about our property development business in the medium to long term. We will soon open up a couple of major projects like the Ahmedabad project, which is a major one, it’s the only township I can think of within the municipal limits of a large Indian metropolitan area. So I expect Godrej properties to continue to do well and its impact on Godrej Industries certainly will be quite substantial.

Q: What about Godrej-Hershey’s in terms of your confectionary business and how you see the topline expanding there? In terms of your raw material costs, the sugar prices has gone pretty much to the roof, is that going to impact profitability a little bit in that sense?

A: That is the only business under Godrej Industries which is under pressure. Sugar prices have increased dramatically, not only in India but all over the world, imported is as or more expensive than Indian sugar. So that business is under pressure. Another problem in the confectionary industry is that it’s not easy to increase the prices, so sometimes you need to reduce weight. It’s a difficult business with these present sugar prices. So I would say we need to wait till the prices come down to see strong growth and performance in that business.

Godrej - The Real Estate Gem

Godrej Indus (Cmp 200) Fv - Rs 1 The recent consolidate above 190 is preparing it for next target of 220-227-240-273-329

Where it will stop cannt say but it reacts very rapidly.

One should have it in portfolio for Long Term also

Generation next takes charge at Godrej

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