Specialist in Asia Pacific, Japan, China, India and South East Asia and Global Emerging Market equities.

Discover more

Stewart Investors manage investment portfolios on behalf of our clients over the long term and have held shares in some companies for over 20 years. They launched their first investment strategy in 1988.

Discover more

FSSA Regional India Fund Monthly Manager Views

FSSA Regional India Fund Monthly Manager Views

October 2021

Godrej Industries

Our investment philosophy is to back owners and managers with whom we feel strongly aligned. These owners typically have track records of treating all stakeholders fairly, in both good and bad times. They are ambitious in growing their business, but also risk-aware in their pursuit of growth. In India, we typically find these traits in family-owned companies (commonly referred to as “promoter groups”). Families are able to take a multi-decade view of their business and act counter-cyclically to create value for all shareholders. Our favoured promoter groups are those who recognise the advantages of introducing professionally-run management teams, high-quality boards and other best practices with respect to governance. We follow such changes closely to identify the cultural markers of families which are likely to succeed over time, and others that may be left behind.

The Godrej group was founded in 1897 and has been stewarded by the family successfully across generations. Its current leaders, Pirojsha and Nisaba Godrej, are from the fourth generation of the family. While they lead the group’s governance, the day-to-day operations of each underlying business are led by talented professional managers. This combination of family ownership and professional management has helped Godrej build leading businesses in segments ranging from Home & Personal Care products to Residential Real Estate and Animal Feed. Godrej Industries is the group’s listed holding company, which owns a 24% stake in Godrej Consumer Products, 47% in Godrej Properties and 62% in Godrej Agrovet. It has a track record of successfully incubating new businesses, such as Godrej Properties, which was listed in 2010 (current market capitalisation of USD 8.6bn) and Godrej Agrovet, which was listed in 2017 (current market capitalisation of USD 1.6bn). We have been shareholders of Godrej Industries for the most part of the last decade.

Recent developments at the company have been encouraging. Its board has been refreshed with four new independent directors as long-standing directors retired. The new board members include the ex-CFO of Novartis India, a partner associated with Fidelity International, the co-founder of a reputed Venture Capital firm and the chairman of a leading Home and Kitchenware brand. Additionally, Godrej Housing Finance, which was set up in 2020, has been injected by the family into Godrej Industries for a nominal sum, and Manish Shah, an executive with significant experience at Citigroup, was appointed its CEO. Given the strong reputation of the Godrej group, the housing finance business is able to access funding at attractive rates. Its pilot program with Godrej Properties has received a strong customer response. Similar to Godrej Properties and Godrej Agrovet, we believe this business has potential to create significant value over the long term.

Godrej Industries’ shareholding in Godrej Consumer Products and Godrej Properties account for 90% of its net asset value. Godrej Consumer Products’ growth has been weak in recent years. It recently appointed Sudhir Sitapati, who has spent over two decades at Unilever, as its new CEO. We expect its performance to improve under Mr Sitapati’s leadership. Godrej Properties is benefiting from the consolidation in India’s fragmented real estate industry, as poor-quality local developers lose out to leading brands like Godrej. These expectations are reflected in its expensive valuations. In stark contrast, Godrej Industries’ valuations are exceptionally attractive, in our view, at a 62% discount to the value of its stakes in its listed subsidiaries and associates. The family appears to share the same view, having increased its stake in Godrej Industries by 6% since 2019. 



Market Value*
(INR million)

Godrej Industries'

Per share value
for Godrej Industries (INR)

% of Net Asset Value Per Share**

Godrej Consumer Products





Godrej Properties





Godrej Agrovet





Standalone Net Debt





Net Asset Value Per Share (INR)


Current market price (INR)


Discount to Net Asset Value


*Market value of Godrej Consumer Products, Godrej Properties and Godrej Agrovet, as at 12th November 2021.

**The % of Net Asset Value is adjusted for the standalone net debt. Source: FactSet, BSE India. 

Godrej Industries’ Discount to Net Asset Value since the listing of Godrej Agrovet

Source: ICICI Securities, 12th November 2021

Performance Commentary

The FSSA Indian Subcontinent Fund declined in October. The key contributors to performance were ICICI Bank and Mahindra CIE Automotive.

ICICI Bank rose after it reported strong quarterly results. Its Net Interest Income (NII) rose by 25% and earnings per share (EPS) by 29% over the same period last year. The bank’s asset quality and Return on Assets (ROA) continue to improve steadily.

Mahindra CIE Automotive also rose after it reported strong financial performance. Its revenues grew by 21% and operating profit by 78% over the same period last year. The company benefited from a rebound in automotive demand in both its Indian and European operations, and market share gains. Its efforts to improve operating efficiency over the last year has helped it strengthen its profitability.

The key detractors were Solara Active Pharma and Colgate Palmolive (India).

Solara Active Pharma declined due to concerns about price inflation on its key raw materials. However, our discussions with the management reassured us that the long-term prospects are still bright, with the CEO stating an ambition to grow revenues nearly four-fold over the coming five years.

Colgate Palmolive (India) declined following concerns about rising commodity costs affecting its profitability. It has dominant market share in oral care which affords the company strong pricing power. Colgate has a long track record of improving its profitability consistently. In our view, it will be able to continue improving its profitability over the medium term, as it passes on price increases to consumers and upgrades its product portfolio to more premium products.


*Company data retrieved from company annual reports or other such investor reports. Financial metrics and valuations are from FactSet and Bloomberg. As at 31 October 2021 or otherwise noted.

Important Information

This document is prepared by First Sentier Investors (Singapore) (“FSI”) (Co. Reg No. 196900420D.) whose views and opinions expressed or implied in the document are subject to change without notice. FSI accepts no liability whatsoever for any loss, whether direct or indirect, arising from any use of or reliance on this document. This document is published for general information and general circulation only and does not have any regard to the specific investment objectives, financial situation and particular needs of any specific person who may receive this document. Investors may wish to seek advice from a financial adviser and should read the Prospectus, available from First Sentier Investors (Singapore) or any of our Distributors before deciding to subscribe for the Fund. In the event that the investor chooses not to seek advice from a financial adviser, he should consider carefully whether the Fund in question is suitable for him.  Past performance of the Fund or the Manager, and any economic and market trends or forecast, are not indicative of the future or likely performance of the Fund or the Manager. The value of units in the Fund, and any income accruing to the units from the Fund, may fall as well as rise. Investors should note that their investment is exposed to fluctuations in exchange rates if the base currency of the Fund and/or underlying investment is different from the currency of your investment.  Units are not available to US persons.

Applications for units of the Fund must be made on the application forms accompanying the prospectus.  Investments in unit trusts are not obligations of, deposits in, or guaranteed or insured by First Sentier Investors (Singapore), and are subject to risks, including the possible loss of the principal amount invested.

Reference to specific securities (if any) is included for the purpose of illustration only and should not be construed as a recommendation to buy or sell the same. All securities mentioned herein may or may not form part of the holdings of FSI’s portfolios at a certain point in time, and the holdings may change over time. In the event of discrepancies between the marketing materials and the Prospectus, the Prospectus shall prevail.

In Singapore, this document is issued by First Sentier Investors (Singapore) whose company registration number is 196900420D. This advertisement or publication has not been reviewed by the Monetary Authority of Singapore.

First Sentier Investors (registration number 53236800B) and FSSA Investment Managers (registration number 53314080C) are business divisions of First Sentier Investors (Singapore). The FSSA Investment Managers logo is a trademark of the MUFG (as defined below) or an affiliate thereof.

First Sentier Investors (Singapore) is part of the investment management business of First Sentier Investors, which is ultimately owned by Mitsubishi UFJ Financial Group, Inc. (“MUFG”), a global financial group. First Sentier Investors includes a number of entities in different jurisdictions..

MUFG and its subsidiaries are not responsible for any statement or information contained in this document. Neither MUFG nor any of its subsidiaries guarantee the performance of any investment or entity referred to in this document or the repayment of capital. Any investments referred to are not deposits or other liabilities of MUFG or its subsidiaries, and are subject to investment risk, including loss of income and capital invested.