Another Potential Multibagger: Avanti Feeds Ltd. Set to Soar

Avanti Feeds Ltd., a leading player in India’s shrimp feed and processing industry, has been making waves with its consistent growth and strategic expansions. With a history rooted in quality and innovation, Avanti Feeds has become synonymous with excellence in the seafood sector. This company, with its strong foundation, is poised to become a potential multibagger, offering substantial returns to its investors in the coming years.

The Powerhouse Behind Avanti Feeds Ltd.

Avanti Feeds Ltd. is a giant in the Indian shrimp feed market, holding a dominant 45% market share. The company has solidified its presence not just in India but also in neighboring countries like Bangladesh and Sri Lanka. The shrimp feed business contributes to a significant 81% of the company’s revenues, with the production of approximately 4,06,995 MT in the first nine months of FY24 alone.

The company is not just limited to feed production. Its shrimp processing business, managed by its subsidiary Avanti Frozen Foods Pvt Ltd, contributes 19% of its revenues. With two state-of-the-art processing facilities in Andhra Pradesh, Avanti Feeds exports processed shrimp to global markets like Europe, the USA, Japan, and more. The company’s strategic expansion includes a new processing plant in Krishnapuram with a capacity of 7,000 MT p.a., which started trial production in March 2024.

Manufacturing Capabilities and Strategic Partnerships

Avanti Feeds operates seven manufacturing plants, six of which are in Andhra Pradesh and one in Gujarat. The company’s shrimp feed production capacity stands at an impressive 7,75,000 TPA, and its processing capacity at 29,000 TPA. Additionally, Avanti Feeds has a shrimp hatchery with a capacity to produce 600 million post-larvae shrimp seed.

A significant part of Avanti Feeds’ success can be attributed to its strategic partnership with Thai Union Group, a global seafood industry leader. Thai Union holds a 24.2% stake in Avanti Feeds and a 40% stake in Avanti Frozen Foods Pvt Ltd, bringing in technical and financial expertise that has propelled Avanti Feeds to new heights.

Fundamental Analysis of Avanti Feeds Ltd.

Let’s take a closer look at the company’s balance sheet dashboard and break down each part step by step for a clear understanding.

The provided fundamental analysis highlights key financial metrics of Avanti Feeds Ltd. from March 2018 to the projected figures for March 2025. Let’s break down the key points:

Sales, Net Profit, and Operating Profit

• The company has consistently grown its sales from ₹3,393 crores in March 2018 to a projected ₹5,891.30 crores in March 2025.
• Despite fluctuations in operating profit and net profit over the years, the company shows a strong recovery with a projected operating profit of ₹540.49 crores and a net profit of ₹421.31 crores in March 2025.

Operating Profit Margin (OPM%)

• Avanti Feeds’ OPM has seen a decline from 20.16% in March 2018 to a low of 6.24% in March 2022. However, the margin is expected to recover to 9.17% by March 2025.

Earnings Per Share (EPS)

• The EPS has shown volatility, peaking at ₹32.78 in March 2018 and dipping to ₹16.26 in March 2022. The projected EPS for March 2025 stands at ₹28.03, indicating a strong potential for growth.

Return on Equity (ROE)

• The ROE has decreased from a high of 45.20% in March 2018 to 14.89% in March 2023. However, it is expected to improve to 17.91% by March 2025, showcasing the company’s resilience.

Asset and Liability Distribution

• As of the latest figures, the company’s assets are distributed across fixed assets (₹497 crores), investments (₹746 crores), and other assets (₹1,847 crores). On the liabilities side, the company maintains a healthy reserve of ₹2,352 crores with minimal borrowings.

Focus and Goals

Avanti Feeds is not resting on its laurels. The company has set ambitious targets for FY24, aiming to achieve 6 lakh MT of feed sales and increase shrimp exports to 15,000 MT. The company is also exploring new markets like Japan and Korea, and is considering entering the fish feed market, which could open up new revenue streams.

Performance of Stock and Recommendations

The performance of Avanti Feeds’ stock has seen significant fluctuations since 2018. Starting at ₹856.67 in January 2018, the stock witnessed a steep decline, closing the year at ₹385.55, reflecting a sharp negative return of around -55% for the year. This downturn was a result of various market conditions and challenges within the industry.

The stock is currently trading at ₹686.80 as on 27/08/2024, it may be bought at current price with strict stopless at ₹630, the stock has potential to Cross ₹1000 marks within 3-4 months.Long term outlook of the stock seems very strong and may grow 3-4 times within 2-3 years.

Conclusion

Avanti Feeds Ltd. is not just another company in the seafood industry; it is a potential multibagger poised for exponential growth. With its robust manufacturing capabilities, strategic partnerships, and solid financials, Avanti Feeds is well-positioned to deliver substantial returns to its investors. As the company continues to expand and innovate, it remains a strong contender for those looking to invest in the next big thing in the Indian market.

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