Good article. Seems Naidu govt is proactively supporting shrimp n crab farming in AP. Helps in increasing the opp size. Avanti story seems intact for several more years. Lets stay invested but needs strong stomach n not get perturbed by occasional disease anti dumping news etsas has been the case for last several years.
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I think, it’s still a good pick, though returns will be moderate going forward.
Could you elaborate please why do you think the returns will be moderate.
Obviously one reason I could guess is the promoters themselves mentioning the same growth pace cant be maintained as the base keep expanding. What else could be your reasons?.
Moderate, compared to what it has delivered in past. Also, such profits attract more competitors.
I still expect it to be a good performer as it is a market leader, very efficient capital allocator, producing lots of cash. At some point, it will need to start diversifying to sustain rapid growth.
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In my opinion, Avanti Feeds is one of those companies, which is continually expanding its Moat in a competitive industry.
- AF is increasing their market share in feeds business, where there has been an oversupply of product by many players. This to my mind remains one of the key strengths of the company which would drive their growth forward.
- diversification into other related segments (like processed shrimp, fish feed in future) remains strong growth vectors of the company for next few years
- fanatic promoter, who is very close to his customer and continually strives to improve the product offering to improve customers overall economics in the business. This in a way creates a win win situation for all stakeholders in the business.
While, high profitability during FY 18 is partly aided by low raw material costs which would taper down a bit in coming years, but i feel operating leverage ( due to higher volumes in feed business) and diversification to processed shrimp/fish feed should partly negate the drop in margins.
Other tailwinds, which may improve the overall industry economics would be growth in Chinese imports, higher export volumes of Shrimp to US from India and growth in consumption of shrimp among Indians. Any of them materializing would give a huge boost to the overall industry and in turn Avanti.
Key risks continue to remain the same as have been outlined in detail in this thread and I would not repeat them. I would like to hear other member views (especially with contrarian views as against mine).
Disc- invested in Avanti. This is not a buy/sell recommendation and my opinion is biased. Investors are requested to do their own due diligence before investing.
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Strong order book to push up exports of Indian Shrimps.Thailand and Kuwait ban will have neglegible effect on Indian shrimp exports.
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@Raj_A_A Thanks for sharing the update. But the link seems to be broken. Doesn’t open. Hence reposting.
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US Shrimp imports from India increased in November 2017 as well compared to November 2016. As expected, volumes were lower in November compared to October 2017. For the full CY (2017), shrimp export volumes from India to US should be ~ 215k compared to 154k in 2016 (almost a 40% growth).
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Fear of new EU restrictions on fish exports eases
Click on the flag for more information about India INDIA
Saturday, January 06, 2018, 02:50 (GMT + 9)
An inspection team from the European Union (EU) that visited the country said it was satisfied with the procedures followed in India to export fish products, according to local press reports.
In addition, it was reported that the team discarded the imposition of new restrictions by the European bloc, which represents a great relief for Indian seafood exporters.
A British commercial source told the Business Standard that export procedures appear to work well in India and no further EU restrictions are expected, unless there is a sudden change, such as an increase in the quick alerts on the EU border.
Although some problems related to primary production on the farms were identified, the Indian authorities are expected to address these problems in the coming months, the source added.
The EU inspectors visited several fish processing plants in Odisha and Tamil Nadu, the main exporting states, in November 2017. They also toured the Paradip fishing port, and aquaculture farms in Astaranga, in the Puri district.
In addition, the EU team met officials of the Ministry of Commerce officials of the Union and the Marine Products Export Development Autorithy (MPEDA).
In 2016, the EU strengthened its inspection standards for aquaculture products from India, and began to analyze 50 per cent of the items, instead of the 10 per cent that it previously controlled.
Sources in the sector consider it is likely that controls of 50 per cent of the items will be maintained.
There was growing concern among Indian seafood exporters, that the discovery of antibiotic residues in Indian shrimp shipments, added to an unsatisfactory response from local authorities, could trigger the imposition of a ban on exports to the European block.
The EU represents about 18 per cent of the seafood exports of India, whose total value is around USD 5,700 million.
Source
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Hi All,
An interesting development, though it is not directly related to Avanti’s business. But, still a good point to keep in mind from a broad perspective.
You can read a brief of this circular from here.
Regards,
Yogansh Jeswani
Disclosure: Invested
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@cesc34 This might be relevant in the SKM Egg Products - thinking out of the shell or in Venky’s thread? 
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A new variety being developed which is better than Vannamei. This can really have a big impact. Is it possible with Vannamei what happened with black tiger?
If this happens how much impact. it can have on the Avantis business ? Can Avanti also focus and change yhe business from Vannamei to this new shrimp ?
I dont have much understanding of this business. Will appreciate if you can share some insight on possible impact on business if this new shrimp comes and replace Vannamei
Relief for exporters: From marine to yarn, drawback rate on 102 items hiked
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