Godrej group splits after 127 yrs: What it means for listed Godrej stocks?

Godrej Group stocks: Most Godrej group stocks have performed well thus far in calendar year 2024 (CY24). Godrej Properties has been the top performer with a near 32 per cent rise in CY24

An amicable split in the 127-year old Godrej empire is likely to remove any overhang on the stocks, believe analysts, with clearly defined roles and responsibilities.

The group's businesses span from real estate (Godrej Properties) to consumer products with marquee brands such as Godrej Powder Hair Dye, Cinthol, Godrej Fair Glow, Godrej Ezee and Godrej Shikakai soap under its fold.

"There is a clear split within the Godrej family, which is always taken positively by investors. This clear division within the 127-year old Godrej empire will remove any overhang as regards the stocks and there could be a possible rerating of the Godrej group," said A K Prabhakar, a market veteran.

At the bourses, meanwhile, most Godrej group stocks have performed well thus far in calendar year 2024 (CY24). Godrej Properties has been the top performer with a near 32 per cent rise in CY24, followed by Godrej Industries (up 29 per cent), Astec Lifesciences (17 per cent) and Godrej Consumer Products (8 per cent), shows ACE Equity data.

Godrej Agrovet (down 2.3 per cent) has been the only loser in this pack. The S&P BSE Sensex, on the other hand, moved up a tad over 3 per cent during this period, shows data.

According to the plan, listed entities including Godrej Industries, Godrej Consumer Products, Godrej Properties, Godrej Agrovet and Astec Lifesciences will have Nadir Godrej as chairperson. In control, besides Nadir Godrej will be Adi Godrej, and their immediate families.

The list of companies under their control also includes Innovia Multiventures Private Limited, Godrej Seeds and Genetics, and Anamudi Real Estates, along with their respective subsidiaries and joint ventures.

The split in the Godrej group, said U R Bhat, co-founder & director at Alphaniti Fintech, has been done amicably without any bad blood, which is an important thing to note.

"This is how big joint properties have to be divided. That said, I do not think there will be any major reaction in the stock prices in the short-to-medium term, as it is business as usual for all the companies in the Godrej fold. Those who were managing these companies till now will continue to do so going ahead as well. What the clear split in the Godrej group does is to put all speculation to rest, and to that extent the overhang on the stocks, if any, is over," Bhat added.

In the other Godrej camp are Jamshyd Godrej, Nyrika Holkar, and their immediate families who will have a control over Godrej & Boyce Manufacturing Company, Godrej Holdings Private Limited and Godrej Infotech Limited, including all respective subsidiaries and joint ventures, and RKNE Enterprises.

Ambareesh Baliga, an independent market analyst, believes it will be back to business for the top brass at Godrej after long parleys to amicably split the group.

"Compared to some of the other family separations, the split in the assets of Godrej was done in a very dignified manner with nothing discussed among the family members coming out in public domain. Any family separation takes a decent amount of mindshare of the members. To that extent, the decisions have been reached and there is clarity on who controls what company in the Godrej fold. The focus will now turn back fully to the businesses they handle," Baliga said.

The development, he believes, will be positive for Godrej group shareholders, especially the listed entities, in the short-to-medium term.