Avanti Feeds Limited — Investor Meet, 28-02-2025: Analysts/Institutional Investor Meet/Con. Call Updates

**Financial Performance:** Avanti Feeds reported consolidated gross income of INR 1,405 crores for Q3 FY '25, a modest increase from INR 1,397 crores in the previous quarter and up 9.2% from INR 1,287 crores in Q3 FY '24. The profit before tax (PBT) also showed strong growth, rising to INR 184 crores, a 14% quarter-on-quarter increase from INR 162 crores. Year-on-year, PBT surged 59% from INR 116 crores. For nine months ending December 2024, total income increased to INR 4,343 crores from INR 4,185 crores, while PBT improved significantly to INR 526 crores from INR 386 crores, primarily due to better sales and reduced raw material costs.

**Future Outlook and Growth Drivers:** Management expressed optimism about sustained production levels driven by favorable climatic conditions and increased feed consumption, particularly in shrimp farming. The company aims to enhance its position in value-added products, especially as demand and margins improve.

**Order Book and Operational Updates:** The shrimp processing division reported a 15% increase in gross income for Q3 FY '25, rising to INR 328 crores despite a slight decline from the previous year's same quarter. Additionally, shrimp exports for FY '25 are expected to reach 15,000 metric tons, an increase from the prior year's figures.

**Analyst Q&A Insights:**

- **Revenue and Profitability:** Analysts probed the impact of fluctuating raw material prices on margins. Management indicated prices of fish meal and soy for feed are stabilizing, while wheat flour prices remain a concern.

- **Market Position:** There is a growing emphasis on diversifying into markets such as Japan, Korea, and the Middle East to mitigate U.S. market dependency and CVD impacts.

- **Operational Risks:** Management acknowledged potential risks from rising raw material prices but expressed confidence in managing costs through optimization efforts.

- **Capex and Allocation:** The pet food division’s establishment will require substantial capex estimated around INR 60 crores, with plans for scaling production by late 2026.

- **Strategic Vision:** The focus will shift toward ensuring margins through value-added products and expanding market share in both domestic and export markets.

**Market Updates:** The aquaculture industry is expected to stabilize in 2025, with an estimated 5% growth anticipated in shrimp feed, aided by improved climatic conditions. The management remains attentive to export market dynamics, particularly the shrimp market's changing landscape in response to global demand.

**Strategic Focus Areas:** The emphasis on value-added offerings, such as ready-to-cook products, signifies a strategic pivot toward higher-margin segments, reflecting management's commitment to aligning product development with evolving consumer preferences.

**Investor Insight:** Overall, Avanti Feeds demonstrates robust financial health and growth potential amid dynamic market conditions. The strategic pivot toward value-added products and exploration of new markets enhances the investment appeal, favoring a ‘buy’ stance as the company positions itself for future growth amidst the challenges of raw material cost pressures.