Accumulate Avanti Feeds; target of Rs 715: 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. Q2FY25 revenue increased by 6% YoY with volumes of feed segment improving by ~6% YoY and volumes of shrimp exports growing by ~16% YoY despite adverse weather conditions in Andhra Pradesh. · EBITDA rose by a ~44% YoY as EBITDA margin expanded by 260bps YoY to ~10%. This is primarily due to lower input prices. PAT increased by ~53% YoY. · AFL’s shrimp exports increased by 8% in FY24. Company guides for a growth of 19% in FY25. Current positive climatic conditions from September are expected to support increased shrimp culture and feed volumes. · The company is diversifying into pet food and pet care products (industry growth estimates at ~20% CAGR) through a joint venture with Bluefalo Company Limited, Thailand. The trading activity is planned to start by end of FY25. The company is also making efforts to enter Þsh feed market. · US imposed a higher CVD of 5.77% (preliminary rate was 4.36%) on Indian shrimp exports, higher than Ecuador who is the main competitor for India. This will pose a competitive disadvantage for AFL, however, its focus on value added products (unlike Ecuador) will outweigh this disadvantage.OutlookThe GoI also has a strong focus on supporting the industry and targets to double exports to Rs. 1 lakh crore. We expect consolidated revenue/PAT to grow at 6%/23\2% CAGR over FY24-26E. We value AFL at 17x P/E (3Yr avg=17x) to arrive at a target price of Rs. 715 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 - 23122024 - geo

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