HG,
This is a dated march 2013 article quite inaccurate as well.2013 was a bumper year for Vannamei farmers.
oops, sorry about that. I mis-read March 14 as March 2014…what can I say 
Thailandunethical labour policies could act as a positive development for India as international practises n countries abhor it.
Seems developing of standards for shrimps might reduce spreading disease in shrimps.
Views invited.
An interesting article highlighting the big opportunity staring India in shrimp exports .
Seems Rabo bank report On Shrimp in a scrimp was prescient in highlighting Indias natural edge in capturing shrimp exports market thanks to long coastal peninsula, riverine system, large no of small farmers taking aggressively to shrimp farming, suitable weather,much better supervisory control by MPEDA n it’s subsidiaries, huge demand coming from US, China, Japan,Korea. Discl Invested.
Seems opportunity size is steadily going to increase in India for feed manufacturers like Avanti thanks to new initiatives like above , big riverine system in India , good export potential.
An interesting article highlighting growing shrimp exports from India.
Good to See that MPEDA n NFDB govt organisations are working for a change. Nice to see how prescient they have been n how beautifully have they walked the talk.
[
Vivek ,
Hope you are checking date of articles before posting them . Below article is dated 13th October 2009.
http://www.thefishsite.com/fishnews/10965/india-to-start-white-prawn-production](http://www.thefishsite.com/fishnews/10965/india-to-start-white-prawn-production)
Nani,
Precisely. Purpose of this dated article was to highlight how nicely Vannamei farming was encouraged & how nicely it worked out.Kudos to MPEDA & other govt bodies for a change.
The article is a relevant one for Avanti stakeholders. Growth assured as opp size is large n growing.
Dear fellow members,
i think my comment didn’t appear completely…so i am reposting it …
As much i can recall from memory . when i last visited Avanti , their was a competitor bigger in size ,how come Avanti has grown to 60 % market share in feeds business?Why arent other competitors expanding at similar pace
If its indeed true, it’s a positive since dominant players can protect their margins .
Seems shrimp prices are continuing their firm price trend.We can an expect solid growth & EPS for FY 15.Any guesses on EPS & PE front? Shud we expect a dividend with 20 % payout ratio of 15 odd Rs & yield of 2.65%?
Hi Vivek,
The EPS estimation is quite difficult for this kind of business, there are many factors that can change sales as well as profits drastically.
The most important question is why shrimp processing business has not done well in last 2 quarters. The possible reason that was cited by a valuepickr earlier was labor problem but that needs to be confirmed. And can it recover. If they are able to use the increased capacity, they will be able to take real advantage of the increased shrimp prices in international markets.
On the other hand, Shrimp feed business has done exceptionally well specially in terms of profitability. I think it will be very difficult to maintain these 12% kind of margins for long, but in case they can take out 9-10% margins over increased capacity, its still a great growth.
Below are the my estimates, the assumptions are also provided in same table. Note that I have ignored any major external changes in shrimp business. i.e. any major fall in the shrimp prices or significant diseases etc in Indian shrimp industry.
| 12MFY15E | |||||||||||
| Q3FY13A | Q3FY14A | Growth | 9MFY13 | 9MFY14 | Growth | 12MFY13A | 12MFY14E | Pessimistic | Medium | Optimistic | |
| Shrimp Feed | 20% | 30% | 40% | ||||||||
| Sales | 94 | 206 | 119% | 378 | 633 | 67% | 501 | 836.67 | 1004.004 | 1087.671 | 1171.338 |
| EBITDA Margin % | 1.5% | 11.6% | 4.0% | 8.4% | 5.1% | 9% | 7% | 9% | 11% | ||
| EBITDA | 1.45 | 23.87 | 1546% | 15.18 | 53.28 | 251% | 25.7 | 75.3003 | 70.28028 | 97.89039 | 128.84718 |
| Shrimp Processing | 25% | 40% | 55% | ||||||||
| Sales | 44 | 71 | 61% | 109 | 219 | 101% | 143 | 286 | 357.5 | 400.4 | 443.3 |
| EBITDA Margin % | 12.7% | 12.2% | 15.6% | 13.2% | 13.3% | 13.20% | 11% | 13% | 15% | ||
| EBITDA | 5.57 | 8.63 | 55% | 17 | 29 | 71% | 19.01 | 37.752 | 39.325 | 52.052 | 66.495 |
| Total | |||||||||||
| Sales | 138 | 277 | 487 | 852 | 644 | 1122.67 | 1361.504 | 1488.071 | 1614.638 | ||
| EBITDA Margin % | 5.1% | 11.7% | 6.6% | 9.7% | 6.9% | 10.07% | 8.05% | 10.08% | 12.10% | ||
| EBITDA | 7.02 | 32.5 | 32.18 | 82.28 | 44.71 | 113.0523 | 109.60528 | 149.94239 | 195.34218 | ||
| Net Profit | 4.73 | 22.44 | 25 | 55 | 31.16 | 78.7901961 | 76.3878444 | 104.5002208 | 136.1409602 | ||
| Net Profit/ EBITDA | 67% | 69% | 78% | 67% | 70% | 70% | |||||
| EPS | 5.2 | 24.7 | 27.5 | 60.6 | 34.3 | 86.8 | 84.1 | 115.1 | 149.9 | ||
Apologies for formatting issues. Posting again with an improved one, request a favor from Admin to delete the old message and this note.
Hi Vivek,
The EPS estimation is quite difficult for this kind of business, there are many factors that can change sales as well as profits drastically.
The most important question is why shrimp processing business has not done well in last 2 quarters. The possible reason that was cited by a valuepickr earlier was labor problem but that needs to be confirmed. And can it recover. If they are able to use the increased capacity, they will be able to take real advantage of the increased shrimp prices in international markets.
On the other hand, Shrimp feed business has done exceptionally well specially in terms of profitability. I think it will be very difficult to maintain these 12% kind of margins for long, but in case they can take out 9-10% margins over increased capacity, its still a great growth.
Below are the my estimates, the assumptions are also provided in same table. Note that I have ignored any major external changes in shrimp business. i.e. any major fall in the shrimp prices or significant diseases etc in Indian shrimp industry.
| 12MFY15E | |||||||||||
| Q3FY13A | Q3FY14A | Growth | 9MFY13 | 9MFY14 | Growth | 12MFY13A | 12MFY14E | Pessimistic | Medium | Optimistic | |
| Shrimp Feed | 0.2 | 0.3 | 0.4 | ||||||||
| Sales | 94.0 | 206.0 | 119% | 378.0 | 633.0 | 67% | 501.0 | 836.7 | 1004.0 | 1087.7 | 1171.3 |
| EBITDA Margin % | 2% | 12% | 4% | 8% | 5% | 9% | 7% | 9% | 11% | ||
| EBITDA | 1.5 | 23.9 | 1546% | 15.2 | 53.3 | 251% | 25.7 | 75.3 | 70.3 | 97.9 | 128.8 |
| Shrimp Processing | 0.3 | 0.4 | 0.6 | ||||||||
| Sales | 44.0 | 71.0 | 61% | 109.0 | 219.0 | 101% | 143.0 | 286.0 | 357.5 | 400.4 | 443.3 |
| EBITDA Margin % | 13% | 12% | 16% | 13% | 13% | 13% | 11% | 13% | 15% | ||
| EBITDA | 5.6 | 8.6 | 55% | 17.0 | 29.0 | 71% | 19.0 | 37.8 | 39.3 | 52.1 | 66.5 |
| Total | |||||||||||
| Sales | 138.0 | 277.0 | 201% | 487.0 | 852.0 | 175% | 644.0 | 1122.7 | 1361.5 | 1488.1 | 1614.6 |
| EBITDA Margin % | 5% | 12% | 7% | 10% | 7% | 10% | 8% | 10% | 12% | ||
| EBITDA | 7.0 | 32.5 | 463% | 32.2 | 82.3 | 256% | 44.7 | 113.1 | 109.6 | 149.9 | 195.3 |
| Net Profit | 4.7 | 22.4 | 25.0 | 55.0 | 220% | 31.2 | 78.8 | 76.4 | 104.5 | 136.1 | |
| Net Profit/ EBITDA | 67% | 69% | 78% | 67% | 70% | 70% | 70% | 70% | 70% | ||
| EPS | 5.2 | 24.7 | 27.5 | 60.6 | 34.3 | 86.8 | 84.1 | 115.1 | 149.9 | ||
Gaurav,
Thanks for your painstaking work. I agree with your estimates. I think Avanti Feeds is in for good times due to
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MPEDA n it’s subsidiaries have done an exemplary job in supervision over the hatcheries n farms in preventing the spread of EMS type of disease ever since Vannamei was launched in India 4-5 years back unlike Thailand, China,
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So we can reasonably expect the next few years also to continue in the same disease free trend.Seems govt authorities specially in Peninsular India work in a much better manner eg Space department, Southern Rly n Telecom, NLC, TNPL, etc
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The opportunity size is huge n is increasing every passing day thanks to world move to eat healthy cholesterol lowering non veg food like Shrimpsn Fishes having abundant Omega 3 fatty acids.
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Rabo bank is right in highlighting Indias natural edge in this business thanks to large riverine , big coastal n peninsular land with sea, low labour cost compared to other parts of world, small farmers finding shrimp businesses very lucrative n viable
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Demand will never be a problem as new markets are opening up like China, Japan,Korea, Europe, South Africa n even India where AFL has foraged into retail business.
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TUF 25% stake in co will act as big differentiator as quality of feed n access to western market for shrimps can be provided n also the best business practices of TUF can be absorbed. Both TUF n CP food s are very positive on Indias potential in this sectors are massively expending their presence.
7 ) all these factors make AFL ideal candidate. For increase in bothe EPS n PE n dividend with every passing quarter The formula for creating maximum wealth like Mayur, Astral,Kaveri.no wonder savvy investors like R Srinivasan have taken a starting position in the co.
)
http://www.digitaljournal.com/pr/1824561
Global aqua feeed market to grow at 12% CAGR for next few years . 65% of aqua feed market to be concentrated in Asian region. Seems Avanti feed opp size is big n will keep on increasing steadily over next few years. ROCE of 30% is decent with ethical promoter execution record imply buy on dips n hold for long. Ofcourse need to closely track for any disease n shrimp price fall .Discl Invested.
MPEDA target $ 10 billion for exports. Opportunity size is gradually increasing .