Thanks for posting the update on Avanti. Can you tell me the time for concal? or is it mentioned anywhere. I checked on BSE and it’s not there.
While taking cognizance of the better looking PE one needs to also note that earnings will probably come down in near term so PE will go higher again.
I think there may be a couple of more quarters of pain but the stock is coming to an price point where risk-reward equation is balanced. It is the best company in a good sector and seems to have much better operating characteristics than the rest of the industry. At slightly lower levels, I would be looking at building a position in this slowly. Long term this has lots of things going for it.
Some good industry data from this Waterbase ppt-
ppt is also acknowledging the recent problems (Page-47)-
Input prices for shrimp feed which remained soft for large part of 2017 have started firming up since the beginning of 2018, the ability of feed producers to pass on price inflation is limited due to heightened competitive intensity and depressed farm gate prices of shrimps
Moderate increase in global shrimp production coupled with increased inventory in US have adversely impacted the farm gate prices during the past few months. While the first crop for farming season 2018 is in progress, sustained weakness in farm gate prices may impact farmer sentiment. However we remain cautiously optimistic and expect the farm gate prices to improve in H2 of FY19
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Corporate Announcement -
- The decline in shrimp price is only a temporary reaction and the consumption of shrimps in US has come back to normalcy and the demand started picking up and would be restored to normal level soon and even expected to go up, which is expected to trigger increase in prices.
- The farmers are in the process of realizing that the fall was a temporary phenomenon, as the farm gate price of the shrimps is gradually increasing now, which will make the shrimp culture much more profitable than other agricultural crops. Moreover, the farmer would have invested in developing the infrastructure for shrimp culture and would prefer to continue this activity.
- The Governments have focused their attention to this sector and considering to render support to the farmers and the industry
- The capacity utilization in feed should be able to achieve a growth rate of not less than 10% in FY19 over FY18 and in processing and export of shrimps 60 to 65% capacity utilisation should be possible to achieve.
- Sustainable margins (PBT} in feed at 10 to 15% and in shrimp processing and export 8 to 10%,
If indeed the Management is holding a Conference Call with the investors in the next few days, then why does it issue a clarification immediately. This point is not clear to me.
However what I gather from this clarification is that management is not willing to reduce margins below 10% for Feed and 8% for processing business. Volume is dependent on multiple external variables which are not in the control of management. Therefore, management can at best provide an informed guesstimate of the expected demand.
Disc: Invested at avg price of rs 2200
Avanti used to give clarifications then and there several times in the past. To me, It’s kind of good instead of waiting to clarify in a scheduled event.
If company gives a clarification,then we feel whats need to give , is something fishy. If company does not give clarification, we feel, the company does not care for investors. For an investor, whether the promoter is a good one or bad one is similar to soneone with blindfolded eyes who touches various parts of an animal , applies his mind, connects the dots and creates an image out of that calling it an elephant or jackal. Just touching a single point like head or tail and making conclusions may lead to both type 1 and type 2 errors in my opinion. Not specific to avanti but to all other businesses and promoters. This becomes more relevant under current circumbstances
All are not well versed with the English i think. The only issue with the filing was the way Subject line was drafted. Instead, if it was drafted like Business Outlook\Proposition, street would have welcomed with both the hands i think. But i dont scratch too much into this. I will give benefit of doubt too Mgmt in this aspect. I am building into it looking into EY+DY, which is more than the bank FD yield as i said earlier.
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We enclose herewith an Invitation in connection with conducting an Audio Conference Call for Investors on 4th June, 2018 at 4.00 PM to discuss he audited financial results for the quarter and year ended 31.3.2018.
This is for your information and record.
For Avanti Feeds Ltd
C Rmaachandra Rao
Jt. Managing Director
Company Secretary & CFO
Despite management clarification -prices are still down. One may keep arguing this is a knee jerk reaction from the market. But somewhere there is this truth that some big fish is bailing out. The prices never lie- something is not well which is what is bothering me.In hindsight may be these type of scrips/industry is not suitable for certain temperament.This is a very violent movement in one direction.
As per mgmt clarification, capacity utilization of minimum +10%/+60% over prev year for feeds/shrimps with margins of 10%/8% resp…will make for a 400cr Cash profit atleast, Value the co sitting on 500 cr cash, generating 400cr min every year. No matter what news say, what macros say, as co is confident for usual business & with all the hard cash being generated… stock looks cheap.
Also demand for quality food can never subdue for long on this planet & no matter supply there will never be lesser mouths to feed.
Also this is a sectoral problem, avanti, apex, waterbase all stocks down by more or less same percent. Avanti being sector leader will only benefit, as small players become unprofitable & quit business, as news channel are saying.
Maybe some big investor is exiting, or maybe its just retail shakedown… stock has had a dream run & someone who entered at 100-200 could just be booking profit.
I am no expert, but same thing happened with me on BajFinance(Market leader) after Demonitisation. Institution gave target of 550/600 & i exited… stock is at all time high of 2100 today.
I’ll let the management & numbers talk.
Copy Of Presentation On The Audited Financial Results
For The Quarter And Year Ended 31.03.2018
Y r they expanding into low margin business when they r yet to capture 50% Market share in high margin, ie feed business?
can someone share the avanti concall nos please scheduled at 4 pm today?