Down 60% from 52-week high! Here's why ICICI Securities sees over 50% upside in this stock

Shares of Godrej Industries Limited (GIL) have tanked over 60 per cent from its 52-week high of Rs 661.55. However, ICICI Securities expects subsidiaries as well as associates of Godrej Industries to be the net beneficiaries of the revival in the economy.

It said that Godrej Industries generates major value from its listed subsidiaries and associates viz. Godrej Consumer, Godrej Properties and Godrej Agrovet.

The brokerage firm has a 'Buy' rating on the stock with a target price of Rs 638, suggesting a 54 per cent potential upside from Tuesday's close of Rs 414.8 on BSE. It expects these businesses to benefit from value migration from the unorganised to the organised sector.

"At current market prices of listed subsidiaries and associates, GIL’s value works out to Rs 603 per share. The stock trades at a discount of 67% to the combined market value of subsidiaries and associates," it added.   

However, it believes that the steep increase in competitive intensity in any GIL business segment may impact its valuation. Also, any sudden increase in raw material prices may also impact GIL’s valuation.

On Monday, the company posted its earnings for the quarter ended September 2022. It reported a 9 per cent rise in its profit to Rs 156 crore as against Rs 144 crore in the same quarter last year. Revenue from operations jumped 22.5 per cent to Rs 4,021 crore for the quarter ended September 2022.

The company said that the Personal Wash and Hygiene segments maintained their growth momentum, delivering double-digit sales growth. Hair Colour witnessed close to double-digit growth. Godrej Expert Rich Crème continues to perform well, backed by strong marketing campaigns.

It further added that the Household Insecticides performance was impacted by the delayed monsoon in the Eastern and Northern parts of India.

Non-mosquito portfolio continues to deliver strong growth momentum and the premium aerosol portfolio continues to grow in double-digits, it said.