AVANTIFEED - Avanti Feeds ltd. Share Price

Q1: If the 50% reciprocal U.S. tariff continues through Q4, what is your expected impact on FY26 processing volume and EBITDA versus the guidance of 17,000 MT?

A1: As of now, we had a strong performance in the first two quarters. For Q3 and Q4, we're actively diversifying into other markets. If duties don't normalize from January, we'll reassess our outlook. However, the 17,000 MT forecast remains intact for now. Specific volume reductions are speculative; we will maintain our guidance until we see changes.

Q2: Can you break down the key components of "other income" and how much of it is recurring?

A2: Our other income primarily comes from two areas: one is from deposits through mutual funds and fixed deposits, generating income from reserves. The second source is foreign exchange gains from forward contracts in our frozen division. While some components are recurring, the overall balance fluctuates based on market conditions.

Q3: Are we expecting a decline in the FY26 feed sales guidance of 5.75 lakh ton, considering our 51% market share?

A3: It's not a decline but a seasonal adjustment. Historically, feed consumption decreases in Q3 and Q4, which is why we project 5.75 lakh tons. This figure is an improvement over last year. We expect to maintain a market share between 51% to 53% moving forward, reflecting a stable market position.

Q4: What is the general sentiment among farmers regarding the tariff situation?

A4: Farmers are concerned but remain confident due to favorable farm-grade prices. There has been no significant decline in aquaculture activity despite the tariffs. Adjustments in the market are occurring; we are focusing on other markets and value-added products to maintain this positive trend, which we believe will continue throughout FY26.

Q5: Can you elaborate on the recent INR 25,000 crore government support initiative and its potential positive impacts?

A5: The government has announced this support to help exporters manage the burden of tariffs. Although the precise mechanism isn't fully outlined yet, we expect guidance soon. These funds can help sustain export orders and stabilize the market amid challenges, with potential benefits aligning with the next agricultural season.

Q6: Regarding the Supreme Court review of U.S. tariffs, if they find them illegal, will we receive any refunds?

A6: It's speculative at this point. We have effectively passed the tariffs onto our customers, so unless there's a retrospective effect, a refund is unlikely. If a decision comes through, it will provide clearer direction on what steps to take regarding potential refunds or adjustments.

Q7: What updates can you provide on CVD rates and how we are adjusting costs?

A7: Current CVD rates are publicly available, and while there's been preliminary assessment for revisions, a final review is yet to be concluded. We have effectively passed on some costs to consumers; the 50% duty is significant, making it challenging to absorb. We continue to assess its impact on sales.

Q8: How do you see the market for fish feed and the pet food segments evolving?

A8: The fish feed market is complex and requires ongoing trials to find appropriate formulations for local species. In pet food, particularly with our new products, we've seen strong initial acceptance. It's a competitive market, but with time and effective marketing, we expect to build a substantial presence, especially with our new facilities planned for FY27.

Q9: What do you anticipate for the feed EBIT margins going forward?

A9: It's challenging to predict, especially with rising raw material prices. Historical margins may revert to 10%-12% but current trends suggest margins could drop to about 9%-10% due to price pressures. We need to monitor market situations closely as we move further into the financial year.