Is something going to change for better for shrimp sector?
Avanti has been holding strong in this carnage and seems to be heading for breakout?
Or just a pre-budget move/false move like in past.
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Good days coming ahead for aquaculture cos.
The FM announced that the government will bring an enabling framework for sustaining the harvest of the fisheries sector in exclusive economic zones and high seas.
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shrimp company are coming up with ex results. Zeal aqua came with superb results today. I am sure Avanti too would come with bumper results. this should give enough cash flow to avanti to scale its pet food business
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A matter of concern
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Esp that peers continue to post very poor nos…some are in losses. Shows how strong/high quality is their business
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Soyabean prices are at multi yearlow.
There is very low chance of going down.
And oil contain is only 18% of soyabean 82% id doc
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Anyone has any information on management guidance on the topline and bottomline for next few years?
Though TTM profit growth is more than 35%, the TTM Sales growth is meager at 6%.
Similarly 3yr, 5yr sales growth and profit growth is in single digits.
How does this justify the PE of 23 for a company growing at single digit rates?
Recently started tracking this company. If anyone has information on future growth prospects, kindly share.
The company’s current P/E ratio of 23 may appear elevated relative to its single-digit sales growth. However, several strategic initiatives could justify this valuation:
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Diversification into Pet Food: Avanti Feeds is entering the pet food market through a joint venture with Thailand’s Bluefalo Company Limited, aiming to establish a manufacturing facility in India.
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Expansion into New Markets: The company is exploring opportunities in markets like China and Japan to mitigate demand fluctuations in traditional markets such as the USA and Europe.
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Focus on Value-Added Products: By enhancing its product portfolio with value-added shrimp offerings, Avanti Feeds aims to improve profit margins and cater to evolving consumer preferences.
These strategic moves are anticipated to bolster the company’s growth prospects and profitability, potentially validating its current valuation.
Regarding specific management guidance on future top-line and bottomline figures, there is no publicly available information detailing projections for the coming years. We may need to await official communications from the company for precise forecasts.
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The pet food industry is a completely different ball game compared to shrimp farming. Avanti Feeds stepping into it through a joint venture with Thailand’s Bluefalo Company Limited is a smart diversification move, but does it actually solve the fundamental risks? Let’s see.
The three biggest risks in Avanti Feeds’ core business (shrimp farming) are:
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Farm Gate Price Volatility
- Shrimp prices fluctuate wildly. If prices drop, farmers cut production, and Avanti’s feed sales take a hit.
- Does pet food help? Not really. Pet food is an entirely different demand cycle. While it provides an additional revenue stream, it doesn’t shield Avanti from the boom-and-bust cycle of shrimp farming.
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Raw Material Price Volatility
- Feed production depends on sardines, wheat, and soybeans—all volatile commodities.
- Does pet food help? Maybe. Pet food uses different raw materials and might offer better pricing power than shrimp feed. But unless it scales significantly, it won’t move the needle much.
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Disease Risk (The Nuclear Bomb of Shrimp Farming)
- A single disease outbreak can wipe out an entire farming cycle, leaving Avanti with zero sales overnight.
- Does pet food help? Yes. This is where pet food makes the most sense. It creates a buffer against a complete collapse of revenue in case of a shrimp disease outbreak.
So, does this solve the core risks? Not entirely. But it does add a lifeline—something that could keep Avanti afloat if things go south in the shrimp business.
How Big is the Pet Food Opportunity?
The Indian pet food market is booming. Some key numbers:
- India’s pet food industry is expected to grow at 20-25 percent CAGR, driven by rising pet ownership.
- Mars, Nestlé (Purina), and Indian players like Drools dominate the market.
- Compared to the US or Europe, India is still in the early adoption stage, so the long-term potential is huge.
For Avanti, this could mean:
- Higher margins, as pet food is branded, and premium pricing is possible.
- A more stable revenue stream, since pet food demand is not cyclical like shrimp feed.
- A chance to build a strong brand outside of B2B shrimp farming.
The challenge is breaking into a highly competitive space where customers already trust big brands like Pedigree and Drools. If Avanti simply tries to compete on price, they’ll struggle. But if they leverage Thai Union’s expertise to create a premium, high-quality product, they have a shot.
Possibility of Success
This won’t be an overnight success story. Avanti isn’t a consumer brand yet, and pet food requires strong marketing, distribution, and brand positioning.
Scenarios:
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Best Case
- Avanti successfully differentiates itself with high-quality pet food, builds a strong brand, and becomes a top player in 5 to 7 years.
- Pet food becomes a stable, profitable segment that offsets shrimp industry risks.
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Neutral Case
- They struggle with branding and end up competing purely on price.
- Margins are thin, and it remains a small side business with no real impact on Avanti’s risk profile.
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Worst Case
- The venture fails to gain traction against established players.
- They burn cash without significant returns, wasting resources that could have been used to strengthen their core shrimp business.
Final Take
Does entering pet food solve all of Avanti’s problems? No. But is it a smart move? Yes. It won’t eliminate the risks of shrimp farming, but it adds a much-needed cushion. The real question is whether Avanti can transform from a B2B shrimp feed company into a consumer-focused pet food brand. If they can, this could be a game-changer. If not, it’ll just be another small diversification effort that doesn’t move the needle much.
Execution is everything.
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thank you for the detailed deep dive
Completely agree that pet foods is a very different ballgame. The category needs very different capabilities to win and there are limited synergies with Avanti’s existing shrimp feed business.
Also, while the market is booming in India, so is the competition. Deep pocketed players have plans to burn huge monies over next 5-10 years to capture India market. It’s a strategic priority for Nestle, given growth slowdown in rest of their business and a significantly low share relative to global market in India (1-2% vs 20% globally). Disruptors such as Drools are growing rapidly due to huge availability of PE capital and deep moats in sourcing. Mars is also investing to localize sourcing and protect their leadership position built over decades.
Avanti has made some good choices to begin with - strategic partnership for sourcing, launch in faster growing cat food and South India market. They have also invested in org and are planning to set up a local plant. That should give them a sourcing advantage that only Mars and Drools have at the moment.
However, in my opinion, investors in Avanti need to be prepared for a long grind as customer acquisition and occupying shelf space is a very costly affair in pet foods. This can erode overall business profitability in the near term.
Disclosure - Invested for the shrimp feed business
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Booked profit in Avanti feeds @ 938. It’s good journey from 398 to 938 for 1.5 years. It appears Avanti feeds run a lot in few days and hence book profit. Will enter again if price comes in my range. I am thankful to all valuepicker member with whom I am learning alot.
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So, Ecuador got much lower tariffs compared to India. It is one of the major shrimp suppliers. Most likely two things will happen 1. Avanti will lose share in US market to Ecuador 2. Overall margins in shrimp products will come down as suppliers may absorb some of the tariffs. Looks big negative for Avanti.
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any breakdown how much operation is coming from US?
Ecuador is 10% tariff vs 26% on India?