AVANTIFEED - Avanti Feeds ltd. Share Price

Management provided an optimistic outlook for Avanti Feeds Limited, projecting a mixed landscape for the aquaculture industry in FY26. They anticipate a feed sales target of around 5,55,000 metric tons for the fiscal year, supported by improved shrimp culture efforts from farmers. The sentiment within the supply chain appears positive, with expectations for at least a 10% growth in feed volume consumption due to favorable climatic conditions.

Key forward-looking statements include:

1. PBT Guidance: The projected profit before tax (PBT) for FY26 is expected to be around 14.5% to 15% of revenues, despite rising raw material costs, particularly for fish meal and soya bean meal. This is based on a nine-month PBT of INR 698 crores, which was a 32.7% increase from the previous fiscal year.

2. Raw Material Prices: Fish meal prices are currently projected to remain volatile, having increased from INR 98 per kg in Q2 FY26 to INR 117 per kg in Q3 FY26, while soya bean meal has risen to INR 44 per kg. The management is actively working on strategies to stabilize costs without significantly impacting margins.

3. Tariff Developments: Following recent changes in U.S. tariffs, including a reduction of duties, management expects opportunities for increased shrimp exports, with projections suggesting a reach of approximately 16,500 metric tons in exports for FY26, up from 14,149 metric tons in FY25.

4. Growth Prospects for Pet Food: The company is expanding its pet food business with positive market reception. Sales have shown steady growth, with reported sales of INR 136.2 lakhs in Q3 FY26. The management aims to enhance product visibility across various e-commerce platforms.

In summary, while management recognizes challenges from raw material costs and global market dynamics, they express confidence in a favorable trajectory for production and market access, contributing to anticipated revenue and profit growth.

Major Questions and Answers from the Q&A Section

1. Question from Nitin Awasthi (InCred Capital):
   "Given that UK's trade deal and EU's trade deal are expected to reduce tariffs significantly, do you see the market in EU expanding for shrimps?"

   Answer:
   "Yes, with the reduction in tariffs, access to the EU and UK markets will improve, leading to an increase in demand for shrimp. We're optimistic that this will create a more competitive environment for our products in these markets."

2. Question from Nitin Awasthi (InCred Capital):
   "How are you reading the El Nino impact on fish meal availability for India and Ecuador?"

   Answer:
   "El Nino does affect fish catches significantly. Currently, Peru and Chile are showing good catches, but we need to manage domestic demand carefully as exporters may prefer higher margins on exports. Policy interventions are essential to balance local availability."

3. Question from Arjun Khanna (Kotak Mutual Funds):
   "What is your outlook for processing for FY27 with upcoming trade agreements?"

   Answer:
   "We anticipate an improvement in market access due to new trade agreements, which could positively influence our processing capacity in FY27. However, we are re-evaluating guidance based on new tariff structures."

4. Question from Ronak Shah (Equirus Securities):
   "Can we expect flattish growth for feed sales despite positivity surrounding shrimp production?"

   Answer:
   "While we're targeting a 10% growth in feed sales due to increasing aquaculture activities, it's contingent on favorable climatic conditions in the upcoming culture seasons. Each season is unique and will impact sales volumes."

5. Question from Akhilesh Rawat (Ridhanta Vision Pvt. Ltd.):
   "How do you plan to penetrate the pet food market dominated by key players?"

   Answer:
   "We're focusing on product quality and have received positive feedback. Additionally, we plan to expand our product offerings and strengthen e-commerce presence, which will enhance visibility and sales."

6. Question from Nitin Awasthi (InCred Capital):
   "Are you facing challenges in selling on platforms like Amazon due to competition?"

   Answer:
   "Yes, we are actively working with Amazon to improve our visibility against established competitors. It's crucial to establish our brand effectively on their platform."

These representative questions and responses encapsulate the major topics discussed during the Q&A session, detailing management's insights on market dynamics, future projections, and their strategic approach.