Waterbase - Can it be Next Avanti Feeds?

The stock seems to have corrected too much owing to the recent floods, expected poor results and disease issue. Having said that is it the right time to enter?

Discl. Sold at 170 levels, looking to re-enter.

“purely” based on charts, the stock has very strong support from 97-81 levels, so any further decline, once could accumulate. this does not mean that the said band would surely be touched. All it means is if one has some stomach for volatility and is investing for long term, one can start accumulating from present levels to 81 in a staggered manner. Do not see 81 getting broken. Again, this is just based on charts and a lot would depend on how bad the results are for this quarter

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Today’s low was 82. Does this stock look good to buy for a longer term and how do people expect the business turn out to be in the upcoming years.

Hi Everyone,

I have to say, this is one company that stood the test of time, it lasted for last 2 decades from the Thapar family.

It disappointed with its products and way it went about its business, but in this new world with all et up and AP state govt. calling it good days for aqua and shrimp culture, I think things will turn, we need to trust them one and think that they can do marvels here and if they dont feel not that disappointed as they are used to doing it.

Not much to loose at these levels, can be just another business, but if things turn, yes as the title says, can ba another Avanti in stock market… Chances of the happening though are <5%

Updates on Operations


Hi Aravind,

Why do you feel that Waterbase has less chance of becoming the next avanti?

Dear VP members,

Why is the asset turnover ratio of waterbase too less?

Waterbase - 3
Avanti - 6.5

Disc: Was invested earlier. Do not hold now.

views on Waterbase results?

i personally think the results are as expected and i must add i am a little surprised with positive Operational income… The communication - more importantly is clear and concise and i think in the next two days stock would bottom out.
disc: I might be a buyer at anything less than 250cr market cap.

Waterbase in my mind has declared excellent results given the current situation.

There are many positives:

  1. They have restarted operations on Jan 27 and merger with Pinnea is progressing well.

  2. They closed One Time Settlement with Canara bank and provision of 3.4cr made in the financials.

  3. Loss of 17 cr has been booked on account of floods – an insurance claim has been made against this loss. If the insurance claim comes in, they will have 50% YOY NP rise even after 3.4 cr OTS.

Disc : Invested in both AF and Waterbase and will add more of Waterbase only on dips.

Hi everyone,

I was going through the Avanti feeds and Waterbase quarterly results and market price over past two years.
What I found Interesting was:

  1. Jun and Sept quarterly results are higher than Dec and March quarterly results.
  2. Stock prices rises during July to November and remains stagnant afterwards. This year its reducing due to negative market sentiments.

Disc: I am a not invested. Just going through the numbers.

What about the disease issue as has been highlighted by management few times. I think this is a big black swan risk that will continue to hurt the company.

Discl. Not invested

Waterbase has been in pressure due to the Nellore floods where it had to close down its unit and which was resumed later .
Shrimp exports from India in FY 2015 stood at 24000 cr and Avantis revenues from export and shrimp processing stood at 266 cr which is just 1.1% .

Exports of shrimps are set to grow between 10-20% annually for next 5 years to reach 35000 - 40000 cr by 2020 . With this we can say Water base can have an edge in the exports after its setting up own hatcheries .

Disc : I have invested in Waterbase around 90 levels and my views may be biased towards the company . Please research on the company before taking decisions .

Price has crossed 100 levels. Is the insurance claim successful?

normally such insurance claims are not denied.

The company has claimed 17 crore for the damages due to flood. Of this claim of 2 crores is for damages of machinery and rest is for inventory loss… my question is will the losses that has occurred to the inventory can be claimed or insurance is applicable only for machineries.
On a positive note promoters have bought around 7.5 lakh shares at 100 odd price …4 lakh bought off the market and 2.96 lakh shares from the routine share purchase. .
Hatcheries will be completed and becomes functional by second quarter.company expecting around 20 crore revenue from hatchery alone every year.
Any other updates??

results on expected lines - all clean up done and with the amalgamation and based on scutle butt I have done, they should grow 30% + given the low base and given the natural operating leverage, expect a 9 % EBITDA and a 5 % PAT (given low tax rates becaue of historical losses).

so this is at about 6-7 x FY 17 E - I expect them to do about Rs. 9-10 EPS as this year margins will depressed due to

  • higher employee expenses
  • plant shut down
    -higher proportion of stock-in trade

plus the upside from the hatchery - which is a high margin biz - 17-20 % plus - so see this as an asymmetrical bet where there are early signs - entry of a professioonal CEO, merger of a group company to create value, focus on market share.

The one thing I would watch out for is receivables and BS management as market suggests that water base is loose on credit compared to avanti - let’s see how that shapes out.

Disc : invested at 60 levels will add at 60-65. see this as a 2-3 x if execution goes well.


Fellow boarders, stock performance recently has diverged from market and Avanti…any reasons except for the relative poor results? Will the US duty have an impact? Thanks

This seems like a pretty good time to be in there. Chandrababu Naidu wants AP to be the hub for Tiger Shrimp exports by 2020.

As I had mentioned before in thread the promoters had purchased 7.5 lakh shares for 100 odd rs…
Recently on July 5th the promoters have purchased 13, 55,000 odd shares off the market at around 95 rs per share…(downloaded the document in pdf but unable to upload. Weak in computer skills :joy: )
As Peter lynch says promoter can sell a share for various reasons. …but he buys only when there is real good news…
They hv increased their shp from 52% to 60 %…
So around 22 lakh odd shares in a span of 3 months and that too at a price of 95 rs + per share( we need to bear in mind that Waterbase had reached 65 rs levels during Jan 2016… but the purchase was made later…so promoters were paying premium price )…
Either this suggests that insurance claim has got a positive response or there is a good growth story ahead of us… curiously waiting for q1 results…
Disc: invested since 80 levels… recent buying spree from promoters tempted me to nibble few more chunk…


interview of ramakanth akula CEO OF WATERBASE

Agri Business
Agri Business
Waterbase to set up shrimp hatcheries
Updated: July 18, 2016 23:12 IST | Swathi Moorthy

Huge potential Of the total marine exports, shrimp accounts for over 60 per cent, generating revenue of $2.7 billion during FY15.
The Waterbase Limited, manufacturer of high quality shrimp feed, is setting up hatcheries in Nellore, Andhra Pradesh, at an investment of ₹20 crore. It will be operational by the end of March 2017.

The hatchery can produce 500 million post-larvae or seeds per annum and it will be sold to farmers for growth and harvesting.

Ramakanth V Akula, Chief Executive Officer, told BusinessLine that the company’s decision to set up a hatchery follows the booming shrimp export industry in the country.

Of the total marine exports, shrimp accounts for over 60 per cent, generating revenue of $2.7 billion during FY15. This gives the seed industry a huge potential for growth.

Akula said, “India’s seed requirement is five billion. Without the presence of organised players, availability of quality seed has become an issue and this gives us an opportunity to grow.”

Capacity expansion

The company is planning to increase its hatchery capacity of 500 million to match the domestic requirement in the coming years. Merger with Pinnae Feeds Limited, a wholly-owned subsidiary of the Karam Chand Thapur Group that owns Waterbase, has leveraged Waterbase’s distribution network, and enabled it to expand to Odisha and West Bengal.

Akula said, “We had capacity constraints and hence couldn’t venture into new markets. This merger has increased Waterbase’s capacity to 1.10 lakh tonnes a year, from 35,000 tonnes.”

Feed is the major revenue generator for the ₹300-crore Waterbase Limited. The industry accounts for about ₹5,000 crore and the company has a market share of about 7 per cent. Though the industry is growing, Akula feels the US government’s decision to hike anti-dumping duty will affect Indian exporters. Waterbase recently resumed their export operation and exports to the US and Europe.

Akula said, “The industry is growing at CAGR of 25 per cent, but it dropped last year due to fall in farm gate prices. Farmers reduced the area of cultivation resulting in reduced output.”

Incessant rain and outbreak of diseases in FY2016 too played a role in shrimp exports dip. “But this year, we hope the exports to pick up again,” he added.