Over the past many months we have been recommending Godrej Inds at 185-200 levels as well as had many trading positions in it in this range of 185-240.
But lets look at a little longer time horizon on the stock and possible reasons for buying the stock with a 1-2 yrs or even 5 years view. The major comfort comes in the fact that management is reliable and has good track record.
Now lets look at some more details
Godrej Inds – Market Cap – 6100 crores
1) Godrej Consumer Products – 21.6% holding is worth around 2900 crores
2) Godrej Properties – 70.6% holding is worth around 3200 crores
So thats give a holding value of around 6100 crores.
Now lets look at other major businesses
Godrej Inds – Chemicals business – Does sales of around 1000 crores.
Godrej Agrovet – Does sales of 1900 crores.
Apart from that there are many other business like Animal Feed, Godrej Tyson Foods, Palm Oil and other Agri products, Godrej Seeds & Genetics Limited.
Apart from this the company- Godrej Inds has a share of 40% in the profits for development of Vikhroli property. They may also have more development of Godrej & Boyce properties all over India.
So if i were to take a rough valuation.
Holding Value Discount – 2500-3000 crores.
Other companies do almost 3000-4000 crores of sales and the real estate development we can give it a valuation of price to sales of 1 ( this is my way m bad at fundamentals neways but a rough approximation )
So at current market cap of 6000-6100 crores i believe downside could be limited to 10-15% but upsides could be easily a double over the next 3 years.
An investor with a long term view should have this stock in the portfolio as its a mix of safety as well as participation in growth with so many verticals.
The above analysis is a quick take and a personal view – Please do your own research.
Disclosure: Have long term investments in the stock as well as we keep trading the stock for small spurts to reduce the holding average.