Godrej plans stake sale in food JV; in talks with potential investors

In talks with potential investors, including PE firms; valuation of company not disclosed

The promoters of Godrej Tyson Foods are in talks with potential investors, including private equity (PE) companies, to sell a minority stake in the company, according to a banking source close to the development.

Godrej Tyson Foods is a joint venture between BSE-listed Godrej Agrovet and the American food giant, Tyson Foods.

The company offers various food products through its Real Good Chicken and Yummiez brands and reported sales of Rs 1,003 crore for the financial year ended March 2023, with a net profit of Rs 8.6 crore. The valuation of the company was not disclosed as these were early talks, the banker mentioned.

An email sent to Godrej Group on Friday did not elicit any response.

Godrej Agrovet shares closed at Rs 520 on Monday, giving it a total market valuation of Rs 9,992 crore.
 

Indian food companies are attracting increased interest from PE companies due to rising consumption in the country.

“Investors are returning to invest in Indian companies, especially in the retail sector, and we can expect more transactions in the second half of the year,” said a banker.

Godrej Tyson Foods is competing with other main players in the ready-to-cook market, including ITC, MTR Foods, McCain Foods, Venky’s (India), among others.

Bankers said investors are keen to buy a stake in the company as the ready-to-cook market in India has grown at 7 per cent in the past decade and is expected to show similar growth in the coming years, according to a report by the Ministry of Food Processing Industries.

The production of ready-to-eat and ready-to-cook foods in India is expected to reach around Rs 9,600 crore by 2029-30, indicating a compounded annual growth rate of approximately 13 per cent.

The report also pointed out that the ready-to-eat and ready-to-cook food market in India is primarily driven by young consumers and the millennial population, which accounts for approximately 34 per cent of the total population, indicating significant potential for the sector in India.