If an investor had put money in the manufacturer of prawn and fish feed Avanti Feeds early in 2016, their money would have doubled, with the share price of the company consistently rising on strong quarterly results and performance. The stellar Q4 results announced today are no surprise to those who have been tracking this company for a while.
The fortunes of Avanti Feeds began to rise in 2009, when the Indian government legalized the cultivation of whiteleg shrimp, which is resistant to disease and easier to farm compared to the traditional black tiger shrimp India used to export. Avanti Feeds moved quickly to leverage on the updated policy, getting into a technical and share partnership with Thai Union Group to upgrade processes and knowledge, and successfully expanding its market share from less than 25% in 2008 to over 50% in 2017.
The company is still focusing on process improvements that will increase margins and market share. One challenge for the farmers it supplies to is the cost of shrimp and fish feed, and Avanti says it has managed to bring down this expense by 20%. The partnership with Thai Union allows the company to keep track of new technology upgrades, and adopt them quickly. This is a lesson many larger Indian companies could learn, to keep up with global competition. The share price of Avanti Feeds is up 20% today post-results, and brings to a head a year-long bonanza for investors who spotted the opportunity early and got in.