Covid-induced spike in palm oil prices to aid Godrej Agrovet's profits

The segment was a key driver of revenues and margins in the September quarter

Rise in palm oil prices is expected to rub off positively on the earnings of Godrej Agrovet. The segment accounted for 17 per cent of the company’s consolidated revenues in the September quarter and is among its more profitable businesses. Other key segments include animal feed, crop protection, dairy and the poultry business under Godrej Tyson joint venture. 

The immediate trigger for the stock is the upside in the palm oil segment given the linkage to global prices. Unfavourable weather conditions, worker issues and supply constraints on account of the coronavirus pandemic in Indonesia and Malaysia, the two biggest producers