Accumulate Avanti Feeds; target of Rs 698: Geojit Financial Services

About this update from Avanti Feeds Limited

Geojit Financial Services research report on Avanti FeedsAvanti Feeds Ltd. (AFL) is a leading manufacturer of shrimp feeds with a capacity of 7,75,000 MT and a shrimp processor & exporter with a capacity of 29,000 MT. AFL has a tie-up with Thai Union Group, Thailand. We maintain our Accumulate rating with a revised target price of Rs. 698, considering expected improvement in margins. Revenue grew by ~17% YoY, supported by volume growth in both feed (+18% YoY) and processing (+34%YoY) segments. However, EBITDA declined by 3% YoY due to lower realisation. The input prices have come down materially from the peak, which, along with the uptick in volumes, will improve margins going forward. AFL has formed a subsidiary to diversify into pet food products (to be completed in two years) and is also making efforts to enter the fish feed and domestic shrimp market. AFL has recently expanded its processing capacity by 7,000MT. The company also anticipates an improvement in shrimp production in the second season. We expect consolidated revenue/PAT to grow at 8%/26% CAGR over FY24-26E and value AFL at 17x P/E (3Yr avg=15).OutlookAFL’s efforts to diversify product segments and markets will benefit in the long term. The GoI also has a strong focus on supporting the industry and targets to double exports to Rs. 1 lakh crore. We value AFL at 17x P/E (3Yr avg=15x) to arrive at a target price of Rs. 698 and maintain Accumulate rating.For all recommendations report, click hereDisclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.Avanti Feeds - 27062024 - geo

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