I think avanti is breaking out of a flag pattern. Not too sure about the targets but I think it should be around 1800 odd. I am not good at charts. Can someone pls confirm?
So the good run continues with shrimp prices remaining firm n rising every day. Seems 2014 will be a record breaking year for shrimp prices in India n abroad n the demand is burgeoning world over as the movement towards healthy food continues .
Also no chances of disease for next few months too as well as has been the case since last 5 years. This perceived risk has kept large no of small investors away from AF or worse booked profit way too early Inspite of painstaking work done here to allay that fear.
Risks are there in every business like FDA for Pharma, Visa fees n immigration bills for IT, cyclicality for a host of other industries so risk is there in AF as well but that doesnât mean we stay away from it. Based on Q1 turnover of 478 Cr n EPS of 28 n with softening of Soya prices the co is on it way to have an eps of 140-150 IMHO so still attractively priced IMHO. Mktcap shud be soon touching the turnover of 2000 Cr expected for FY 15 and Fy 16 shud be another record breaking year as fresh capex of 1 lac T , processing n hatchery will be complete by April 15 for Indias no 1 aqua co,
Thai production still below par. Indias shrimp exports to rise on a steady state.
http://www.digitaljournal.com/pr/2129297
Global aqua feed market to grow steadily for long time.
Soya prices crashing to 3000 Rs per T from 4600 per T spell good time for AF.
Business model is fairly scalable . A classic example of buy right n sit tight.
Coming to risks all Industires are prone to it the latest being Sun Pharma the biggest wealth creator now feeling the heat of US FDA visit at its biggest plant in Halol.
Seems like production will see an increase as demand is still intact.
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I had been meaning to post this on avanti :
)- I have got glowing references on the promoter first hand from someone who is my senior from IIMA - he said he is driven and aggressive and is interested in making this go a long way. He said he could convince even gujarati officials about the need to set up a shrimp farm (who are typically vegetarians) and how it will benefit the overall economy and job creation
)- there seems to be a small bubble in shrimp farming as quite a few people have gotten into this. Sort of reminiscent of the early 1990s run in IT services - the good point is that this bubble seems to have some legs unless an event like a disease outbreak or a low cost country comes along
)- avanti is positioned nicely this year and after on hte back of lower soya prices, a long runway for global demand (from taiwan and china where middle class has a fetish for shrimp) and this will go a long way.
Net, net seems to be a good, 2-3 year story and I was running the numbers and a Rs. 80-90 cr. FCF for FY 15 seems likely - that makes the CMP fairly priced still. Of course, if they continue growing at 50% for 2-3 years, it could still be a 3-4 x from here.
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@varadharajan ragunathan, thanx for your valuable information and point of view. i agree the players are coming in but that can be taken as a positive sign to some extent as basant maheshwari pointed out in his book âthe thoughtful investorâ the difference between bull market and bull market frenzy is that the latter has low barriers of entry so players come in fast and build up the euphoria. there may be a bubble but i think itâs in the emerging phase as the production is still at par or below. worldâs largest producer of shrimp thailand is producing around 200,000 tonne due to ems and also asia is gaining market share in eu and america.no oversupply seems to affect and prices are intact. moreover valuations doesnât seem to be bubble like scenario. so i dont think weâre gonna face any bubble any time soon.As you said 2-3 years of 50% growth is ahead so the growth part remains the trump card for avanti feeds.
disc: invested
Vardha- great inputs, thanks!
It is not surprising that there is something of a shrimp bubble as this has been true of all commodity booms right from the 19th century California gold rush, the key thing to note here is that once the inflated prices normalize only the lowest cost and most efficient producers survive and thrive.
Any idea where Avanti sits on the cost curve globally?
Bobby
http://www.indexmundi.com/commodities/?commodity=shrimp&months=360
As you can see from above graph,the shrimp prices have reached historical high, and also if you observe the fact that it has not stayed at that high for longer period and most of the time the fall has been deep.
I am not taking this a sign for jump the ship as many have pointed out there could be good growth in coming years , but at same time we cannot deny the above data as well. The price is US related which is where people are expecting a big growth to come from, but at what cost is the question?
@ayush and other seniors who have been following this company a long time will be able to help us understand the situation better.
Your concern should not be ignored and at the same time no need to be panic.
One thing is sure that Avanti may provide sleepless nights in coming future. This stock doesnât appear to be stock like Kumbhakaran type.
above link will suggest that price level (in INR) of 2001 was achieved after 10 years !
Kunal
Link: http://www.indexmundi.com/commodities/?commodity=shrimp&months=360 http://www.indexmundi.com/commodities/?commodity=shrimp&months=360 Link: http://www.indexmundi.com/commodities/?commodity=shrimp&months=360
Are you guys looking at the right data? The shrimp price quoted in your link is based on mexican origin. It is quoted at approx INR1094/pound whereas economic times article state INR650/kg which should be about INR295/pound. Are these prices for white shrimps, tiger shrimps or some other variety?
Are people assuming that shrimp prices is a derivative of shrimp feed prices or lower shrimp prices will reduce the farming and in turn the feeds? What is the key reason for over-analysing or tracking the shrimp prices?
Please bear in mind that Avantiâs majority of revenues (and profits) actually come from their shrimp feed business rather than shrimp export business. This means shrimp prices have very little direct correlation to profitability of Avanti (except for their sea food business of course).
The trend we need to watch for is the growth of shrimp exports from India (since a major portion of business is domestic). Higher the sales of shrimps from India, higher the demand for Avantiâs products. While this parameter is to a certain extent affected by shrimp prices, falling shrimp prices does not mean that exports from India will also reduce. All countries will be affected equally.
Daily or even monthly price tracking of shrimps whether vannamei or tiger in my opinion is completely senseless. A quarterly tracking should give us a good idea as to how things are resuming in Thailand after the disease outbreak.
What we do need to track regularly however, which no-one on this forum seems to be doing is tracking shrimp export numbers from india on a monthly basis!
This is my analysis but I am open to criticism!
Views (and export data) invited!
Abhishek.
High shrimp prices drive high farmer profits thus making them more willing to splurge on shrimp feed, this logic is fine as it goes however let us not forget some basic principles of economics.
Shrimp or prawns have plenty of substitutes thus making them quite price elastic so it is very likely that as prices dip the volumes will increase generating good demand for farmers and in turn shrimp feed.
As long as shrimp prices remain above cost of production there is nothing much to worry about.
@Abhishek
Irrespective of the underlying arguments, i agree with the basic premise of monitoring the export data.
With that in mind, i have used the data at the below link:
http://aquafind.com/FishData/ShrimpExports.php
| Product | Country | 2013 Kilos | 2013 Value | 2014 Kilos | 2014 Value |
| SHRIMP COLD-WATER FRESH/DRIED/SALTED/BRINE | INDIA | 3,985 | 69,475 | 933 | 23,436 |
| SHRIMP COLD-WATER SHELL-ON FROZEN 26/30 | INDIA | 33,747 | 411,384 | 3,265 | 41,040 |
| SHRIMP COLD-WATER SHELL-ON FROZEN < 15 | INDIA | 2,267 | 30,100 | 0 | 0 |
| SHRIMP WARM-WATER FRESH/DRIED/SALTED/BRINE | INDIA | 124,540 | 2,951,218 | 277,316 | 6,575,225 |
| SHRIMP WARM-WATER SHELL-ON FROZEN 15/20 | INDIA | 7,463 | 70,092 | 6,532 | 84,000 |
| SHRIMP WARM-WATER SHELL-ON FROZEN 21/25 | INDIA | 1,508 | 11,760 | 0 | 0 |
| SHRIMP WARM-WATER SHELL-ON FROZEN < 15 | INDIA | 18,893 | 185,014 | 0 | 0 |
I dont understand what is causing Avanti prices to fall. This in my opinion is a great development for Indian shrimp feed companies as more market share of shrimp exports is likely to shift to India!
Any buyers of the stock on this forum today?
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Is the weather /threat of cyclone playing spoilsport? ](http://english.vietnamnet.vn/fms/business/113685/shrimp-prices-tumble-as-anti-dumping-duties-soar.html)
All,
Only 16% of AFâs revenues come from ExportsâŚas reported in their Q1FY15 Results Press Release.So,I see a minimal impact on the topline.Noteworthy also is the fact,that the Domestic Biz. is growing at a much faster clip than Exports,from the past 5-6 quarters(& maybe even earlier) This means that the total exports contribution to topline is also reducing.So,nothing to worry if Shrimp prices drop in the International markets.The company should continue to deliver.
In early trade,the stock was down as much as Rs.200! The cyclone thing too,was a concern last year & I am very certain,it would be another short-term blip for the stockâŚnothing more.The business outlook is unchanged.Q2 should be very good(Soya prices crashing is another tailwind)
Disc.: Invested.
The duty will impact only vietnam so prices of shrimps have dropped probably only in vietnam because of oversupply. Other countries will largely continue undisturbed. If anything, prices of shrimp in US will go up (We should check the % of imports from Vietnam to guage an impact) I think the drop in share price is just due to sentiment dent by cyclone. Low conviction guys getting scared. @sagarâŚAs someone mentioned earlier, though direct % of export is low, the farmers produce is exported. So if the farmer doesnât get good price, it will eventually hit AF business. But the impact will come with a lag of at least 1 or 2 seasons if some farmers decide to stop shrimp farming and move to something else next season.
Hi Friends from AP,
Any news on the impact of this cyclone might have on Shrimp farming in general and Avanti ?
I agree, that cyclone is just a short term blip, but this news is not.
We have to agree that, one of the reasons shrimp industry has grown so much is because of the excellent monitoring by the Fisheries department. But with so much growth, are the fisheries department equipped to handle, in terms of personnel to handle such huge volumes.
Here is the link to the article: