“India ranks second-largest globally in fish manufacturing and aquaculture. Seafood exports are valued at ₹60,000 crore,” Union finance minister Nirmala Sitharaman stated in her finances speech on 1 February.
She added that to unlock the marine sector’s untapped potential, the federal government will set up an enabling framework for sustainable harnessing of fisheries from the Indian Unique Financial Zone and the excessive seas, with a particular give attention to the Andaman and Nicobar and Lakshadweep islands.
Avanti Feeds Ltd, an built-in seafood firm that manufactures and exports animal feed and shrimp merchandise, appears well-placed to profit from the finances 2025 fisheries and aquaculture push and the anticipated rise in international demand for shrimp.
The finances enhance
Avanti Feeds has emerged as a wealth creator, with its shares hovering 65% since 1 January 2024, far outpacing the Nifty Smallcap 250’s 15% acquire in the course of the interval. The inventory now trades at a price-to-earnings (PE) a number of of twenty-two.5x, barely above its five-year common valuation of 21.2x.
As of December 2024, Avanti Feeds had restricted mutual fund possession. Bandhan Mutual Fund led the pack with holdings price ₹279.59 crore, accounting for 0.43% of its fairness belongings beneath administration (AUM). UTI Mutual Fund adopted with ₹72.08 crore, making up simply 0.03% of its fairness AUM. Main gamers like SBI Mutual Fund, HDFC Mutual Fund, Aditya Birla Solar Life Mutual Fund, DSP Mutual Fund, and Nippon India Mutual Fund additionally had small stakes, based on knowledge from Prime Database.
If all goes nicely, analysts consider Avanti Feeds could possibly be one of many largest winners of the most recent coverage push.
Launching a sustainable fisheries administration framework aligns completely with the rising international demand for licensed sustainable seafood, opening doorways to thrilling new market alternatives.
The federal government plans to double shrimp exports to ₹1 trillion, backed by the budgetary allocation of ₹2,465 crore for the Pradhan Mantri Matsya Sampada Yojana (PMMSY), up from ₹1,500 crore in 2024-25 revised estimates.
The finances 2025 additionally proposed slashing the fundamental customs responsibility (BCD) on fish hydrolysate for shrimp and fish feed from 15% to five% and elevating the Kisan Credit score Card (KCC) mortgage restrict for farmers and fisherfolk from ₹3 lakh to ₹5 lakh. “To boost India’s competitiveness within the international seafood market, I suggest to scale back BCD (fundamental customs responsibility) from 30% to five% on frozen fish paste (Surimi) for manufacture and export of its analogue merchandise,” Sitharaman stated.
Earlier, the finances 2024 additionally introduced monetary help for nucleus breeding centres for shrimp broodstock and simpler financing for shrimp farming by the Nationwide Financial institution for Agriculture and Rural Growth (NABARD).
Analysts take
“Avanti, being the biggest producer of shrimp feed with a market share of roughly 45-47% (775,000 metric ton capability) and a shrimp processing capability of 29,000 metric tonnes, is predicted to profit from these developments,” stated Vincent KA, analysis analyst, Geojit Monetary Providers.
He anticipated the corporate’s income and revenue after tax to develop at a compound annual development fee (CAGR) of 6% and 22% to round ₹6,050 crore and ₹530 crore, respectively, over FY24-26, with the working margin anticipated to enhance to round 12% from 8.6% in FY24.
India’s shrimp trade has been battling tough waters, with demand from its largest export market—the US—shedding steam. The challenges started with swelling inventories within the US and fierce competitors from Ecuador, driving down demand and costs. Rising freight prices and extra countervailing duties (CVD) within the US squeezed margins additional.
To make issues worse, shrimp feed prices have skyrocketed because of provide shortages, with fishmeal costs surging 50% and soya costs hovering 80% within the final three years.
Vincent added that the Indian authorities’s help for shrimp farmers has restricted the corporate’s skill to completely go on rising enter prices. That stated, he believes the outlook for this trade has improved.
“Information on imports to the US signifies that India is regaining market share whereas Ecuador’s (the main competitor) development is declining,” stated Vincent.
Analysts identified that US stock ranges are bettering, which ought to bolster demand and pricing, seemingly marking the tip of the downturn. Moreover, the sharp drop in soybean meal costs is ready to offer a robust enhance to margin restoration. Nevertheless, fishmeal costs stay elevated, posing a lingering problem.
In the meantime, “Avanti Feeds can also be diversifying into the pet meals and pet care merchandise sector (estimated trade development at ~20% CAGR) and is making an attempt to enter the fish feed market,” Vincent stated.
“Because the market chief with nearer to 50% share in India’s shrimp feed trade, Avanti advantages from strategic partnerships with Thai Union and BlueFalo,” stated Karthick Jongadla, smallcase supervisor and founder and chief govt of Quantace Analysis.
Jongadla added a zero-debt stability sheet, together with vertical integration from hatcheries to exports, and a sturdy 26% year-on-year revenue after tax development in FY24, showcasing robust monetary energy. Furthermore, the corporate is investing ₹250 crore to double processing capability at its Krishnapuram plant by 2026 and ₹50 crore in R&D to develop sustainable feed.
Avanti Feeds is scheduled to announce its December quarter earnings on 10 February.
It’s not all easy crusing
Unstable uncooked materials prices, unpredictable climate, and international commerce pressures might rock the boat. Buyers ought to preserve a pointy eye on uncooked materials costs and the worldwide worth restoration in 2025—key elements that would make or break Avanti’s subsequent large rally.
Jongadla defined margins stay beneath stress as risky fishmeal and soybean costs—accounting for 60-65% of feed prices—proceed to fluctuate. Moreover, with 80% of operations concentrated in cyclone-prone Andhra Pradesh, geographic dangers loom massive. Avanti’s heavy reliance on shrimp exports, which contribute 85% of its income, exposes it to international market swings, whereas regulatory hurdles just like the 5.77% US CVD and rising competitors from Ecuador and Vietnam additional add to the headwinds.
One other dampener is the delay in receiving PLI incentives.
In its November 2024 convention name, Avanti Feeds confirmed its eligibility for a 6% incentive on uncooked merchandise and 10% on value-added merchandise for incremental gross sales over six years (FY22–FY27). The utmost incentives are capped at ₹79.44 crore, contingent on a minimal 5% CAGR in gross sales. As of September 2024, the corporate had acquired ₹16.77 crore, together with incentives from FY23.
Nonetheless, the important thing development drivers appear firmly in place.
“The worldwide shrimp market is projected to develop at a 5.5% CAGR (2024–31), supported by health-conscious consumption and rising demand from the European Union (EU), which elevated to 19% market share in Q2FY25 from 4% on-year,” stated Jongadla.
Additionally, Avanti Feeds is diversifying with a ₹130–150 crore pet meals three way partnership and fish feed trials to scale back its dependence on shrimp, he added.
Avanti Feeds is mitigating dangers by EU diversification and premium product shifts.
“With a give attention to automation, coaching 150 apprentices by March 2025, and increasing Krishnapuram’s value-added capability to 29,000 metric tonnes, the corporate is well-positioned for 25%+ EPS development,” added Jongadla.
Nevertheless, long-term development hinges on stabilizing uncooked materials prices, enhancing infrastructure, and maximizing the advantages of presidency initiatives.
