Avanti Feeds Ltd. share price target

With correction in fish meal and soybean prices, Avanti reported gross margin of 23.9% in Q4FY23, highest in past 21 quarters. We believe the margins have bottomed out in FY23 and model recovery in FY24-25. However, we note the muted demand in USA for shrimps is likely to impact revenue growth in H1FY24.

We note multiple positives from Avanti’s Q3FY23 as (1) the profitability is mostly bottomed out as the impact of covid as well high RM prices is over. With correction in commodity prices, we model steady recovery in EBITDA margin to 7.5% in FY25E from 6.4% in FY22.

Led by strong growth in the processed shrimp segment (up 55% YoY), Avanti feeds reported revenue growth of 11.4% YoY during the quarter.

Positive demand outlook, cost inflation impacts margin Avanti Feeds Ltd (AFL) is a leading manufacturer of Shrimp Feeds with a capacity of 6,00,000 MT, and Shrimp Processor & Exporter with a capacity of...

Softening of input prices & price hike will reduce stress Avanti Feeds Ltd (AFL) is a leading manufacturer of Shrimp Feeds with a capacity of 6,00,000 MT, and Shrimp Processor & Exporter with a capacity of...

Revenue/PAT to grow at 18%/23% CAGR over FY21-23E. We value AFL at FY23E P/E of 19x considering healthy growth & RoE, and no debt. Revenue growth aided by healthy growth in feed volumes For Q4FY21, revenue grew by 6% YoY on account of 16%YoY growth in Feed segment while Exports de-grew by 23%YoY. Feed volumes improved by 14%YoY while export volumes declined by 19%YoY mainly due to disruption in marine logistics, weak demand, and recall of certain products sold in USA. As restaurants & malls are reopening, demand is picking up which is supporting prices also. Better farm-gate prices are encouraging farmers and AFL's increasing market share in Feed segment (48%50%) will support future volumes. The price hike taken in recent months will also...

The company recorded 6% YoY growth in consolidated sales on the back of 3% YoY growth in shrimp feeds volumes and 5% YoY shrimp feed realisations in Q2FY21. Shrimp processing volumes were lower by 11% YoY...

For Q2FY21, revenue grew by 6% YoY on account of gradual improvement in operations post lockdown. Feed volumes improved 2.5%YoY and Feed realisation grew by 5%YoY due to price hike in previous quarter. However, Processing volumes de-grew by 11%YoY while export realisation grew by 15%YoY due to better region mix. Industry shrimp production is expected to drop by ~15%-20% in FY21 due to Covid-19 led disruptions but to improve in FY22. Relaxation in restrictions and improvement in farm-gate prices is encouraging farmers which along with AFL's increasing market share in Feed segment will support future volumes. We expect...