GOKUL AGRO RESOURCES LTD.

RESEARCH REPORT

NOVEMBER 29, 2023

RESEARCH
BY KEYUR PATEL
GOKUL AGRO RESOURCES LTD. Solid revenue growth driven by volume increase

CMP Market Cap (INR Cr.) Recommendation SECTOR LISTING

INR 124 1,850 Cr. ACCUMULATE EDIBLE OIL BSE & NSE

About the stock: Incorporated in 2014, GARL is an integrated agribusiness Company

producing edible oil, vanaspati and non-edible oil. Co. has large scale of operations that
cover seed processing, seed crushing, oil refining and storage terminals, continue to
deliver efficiency and quality across value-chain.
•Company is in manufacturing and processing of various kinds of Edible, Non-Edible oils
and meals. Its edible oil portfolio includes brands like Vita life, Mahek & Zaika. Vanaspati
portfolio includes brands like Richfield & Puff pride.
•The Company has 25+ products in its portfolio. It includes brands like vita life, Zaika,
Mahek, Richfield, Bisco pride, Puff pride, and Pride. Co. has 575+ strong distribution &
dealers’ network.
•The Company’s top 5 clients contribute to 20-25% of the overall revenue. Its clients
include Parle, ITC Ltd, Britannia, Godrej, and Amul, Nirma, Balaji wafers also their client.
International clients such as Alberdingk Boley, Arkema, Alnoroil, Loiret & Haentjens.
•Co. has presence in more than 17 states in India and 35+ countries worldwide, its major
international markets include France, Singapore, USA, Germany, Japan, Netherlands,
Belgium, UK, China, South Korea, etc.
Business Model: Co. is Sourcing Finest seeds from different parts of our country directly
APMC Mandis & farmers. Imports directly from Plantations and manufacture across the
world. Packing Products like tin plates and granules are procured domestically.
•The Processing of Seeds and Extraction, Bleaching, deodorization, Toasting and
Grinding process in refineries. Tin and packaging material manufacturing facility
12+ Different Quality Certification assurance.
•Processed Products such as Edible Oil, Industrial Oil, De-oiled Cake, Bakery
Shortening, Castor Derivatives.
• The Co. plant is located at Gandhidham, Com Gujarat, on an area of 90 acres of land
with various manufacturing facilities for various edible oils and allied Com products.
• The Gokul Agro group has a seed processing capacity of 3,200 TPD, DOC capacity of
1,000 TPD, oil refining capacity of 3,400 TPD, vanaspati manufacturing capacity of 200
TPD, and castor derivative capacity of 100 TPD at this plant.

Investment Rationale:
• INDUSTRY STRUCTURE AND DEVELOPEMENT: The global cooking oil
market is driven by increase in consumption of high-quality edible oils/cooking oils by
health-conscious consumers and growing demand from various applications, such as
confectionery, primarily in the production of candies.
• Edible oils market is expected to reach USD 190.88 billion by 2030, which is USD
102.37 billion in 2022, registering a CAGR of 8.10% during the forecast period of FY
2023-30.

• OPPORTUNITIES: GARL has big opportunity in biggest consuming market –

INDIA, So the rising consumer health concerns towards the high prevalence of coronary
heart diseases, diabetes, obesity, gastrointestinal disorders, Rapid Urbanization, changing
dietary patterns, etc., are primarily driving the demand for healthy edible oil. the market
is further catalysed by the growing awareness towards several health benefits of organic
and low-cholesterol edible oil.
• Company is settling up new greenfield edible oil refinery at Krishnapatnam in Andhra
Pradesh to cater the growing needs of the people of the region and it will expand to Pan
India basis.
• India’s population and low per capita consumption is continuously increasing which
will boost the sector significantly.
 • Risk: Overall operations are dependable on the supply of large amount of Raw
material such as Palm Oil, Soyabean Oil, Sunflower Oil, Oilseeds So that Local and
Global weather patterns effect on the availability of Raw material and their prices
Fluctuations will also be impacted.
• Any adverse government policies or decisions both at exporting countries and in India
can have a temporary impact on the supply – demand.
• Commodities to go through volatility and are prone to make sharp price moves in short
time however with disciplined hedging and being ahead of the market Co. have been able
to deal with them quite well

KEY FINANCIALS
INR (Rs in Crores) FY 20 FY 21 FY 22 FY 23
Revenue 5,586 8,371 10,384 10,740
EBITDA 132.87 157.41 241.50 298.31
OPM 2% 2% 2% 3%
PAT 19 45 123 132
EPS 1.41 3.29 8.33 8.97
P/E 10.6 12.1 9.9 13.9

Robust Top-line Growth by an increase in volumes

For Gokul Agro Resources, YoY growth 50%+ in revenues & profitability over FY20 to
FY21, led by strong execution pick-up in Edible oil segments and 16% Compounded
Sales growth from last 5 Years and Profit growth 54% CAGR over last 5 years.
• EBITDA Growth CAGR 18%, 53%, 23% seen over FY20-23 and estimate similar as
for Next FY24-25. EPS Grew 536% over a FY20-23. (Expect 20%+ Growth in Profit)
• Edible Oils & by Products contributed 87% of total turnover while Non-Edible Oils &
by Products – 8.8%, De Oiled cake/Oil Cake – 2.6% and Vanaspati Contributed 1.5%.
Export contributed to 9.8% of overall sales in FY23.
• Raw Material Breakup for FY23: Crude Oil cost 87% of material and Oil Seeds 13% of
material cost So Major Raw Material Dependency is Crude Oil.
• Last year, the company has acquired JVL Agro Industries Ltd. The company has made
full payment Sale Consideration of Rs. 107.35 Crore based on the Letter of Intent issued
by liquidator of JVL Agro Industries Limited.
• The Company has issued 44,71,011 equity shares by way of Rights issue at a face value
of Rs. 2/- each and at a premium of Rs. 90/- per equity share in last FY.

KEY RATIOS
Key Ratio FY 20 FY 21 FY 22 FY 23
EBIDTA Margin (%) 4% 18% 53% 23%
ROE (%) 7% 14% 30% 23%
ROCE (%) 20% 23% 32% 28%
Debt/Equity (x) 3.85 3.50 2.65 2.44

Equity Capital 30 Cr.

ROCE & ROE
Face Value ₹ 2.0
30%
23%
7%
14% 32% 28%
Book Value ₹ 48.1
20% 23%
Pledged Percentage 14%
FY 20 FY 21 FY 22 FY 23

ROCE ROE Debt Sep-23 458 Cr.

Stock P/E 13.8

5 Years P/E 11.9
5 Years ROE 19.4%
5 Years EPS Growth 51.4%
5 Years Return 61.3%
Valuation & View: Gokul Agro Resources experiencing robust revenue growth driven
by an increase in volume as the strong momentum in the Edible oil and by products are top
performer in these categories, with compounded Revenue growth of respectively 24% in
last 3 year. An unfavourable Geographical whether also effect on the net profit margin.
This is volume driven industry so OPM is always less and focus on Sales growth.
Currently, Stock is trading at P/E multiple of 13.8x based on current year EPS.
• We estimate that revenue will grow at 21% CAGR over FY23-FY25E and PAT will
grow at 25% CAGR over FY23-FY25E with the expectation of it intending to expand the
business in Castor oil production because Demand of castor oil is expected to rise in
future as a potential alternative to petroleum-based chemicals and momentum in sales
volume to continue, going forward. We expect a 60% Return (target of 196) will make in
upcoming 1.5-2 years duration based on performance of recent quarter results.

Shareholding Pattern STOCK PERFORMANCE

140

120

100
27.38%
80

60
0.06%
72.56% 40

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Sep-23
Promoter FIIs Public

Disclamier :- This Research report for education purpose only and no any advice or
recommendation and should not be considered as such. Always do your own study and
seek independent financial advice when required.