X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2018 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Avanti Feeds: Superb start to FY16 - Views on News from Equitymaster
The India Letter
  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Avanti Feeds: Superb start to FY16
Sep 8, 2015

Avanti Feeds announced its results for the quarter ended June 2015. During the quarter, the company's revenues and profits grew by 26% YoY and 78% YoY respectively.

Performance summary
  • Revenues up by a fourth during the quarter. Growth led by the company's shrimp feed division.
  • Operating profits grow by 61% YoY as margins expand by 2.3% YoY to 10.6%.
  • Net profits rise by 78% YoY on the back of higher operating profits. Barring the extraordinary income of Rs 43 m, profit growth is in line with the operating performance.

Financial snapshot
(Rs m) 1QFY15 1QFY16 Change
Net sales 4,798 6,034 25.8%
Expenditure 4,398 5,393 22.6%
Operating profit (EBDITA) 399 642 60.6%
Operating profit margin (%) 8.3% 10.6%  
Other income 12 32 158.2%
Interest 6 3 -50.4%
Depreciation 20 26 28.3%
Exceptional items - 43  
Profit before tax 386 688 78.4%
Tax 129 231 78.4%
Effective tax rate 33.5% 33.5%  
Profit after tax/(loss) 256 457 78.4%
Net profit margin (%) 5.3% 7.6%  
No. of shares (m) 9.1 9.1  
Fully diluted EPS (Rs)*   145.7  
P/E (x)*   18.6  
(* annualised, ** on trailing twelve months earnings)

What has driven performance quarter ended June 2015?
  • Avanti Feeds' revenues grew by 26% YoY during the quarter. Growth was led by the company's shrimp feed division, which contributed to about 89% of the business this quarter (83% in same quarter last year). The segment's revenues grew by 35% YoY. As for the shrimp processing division, the same de-grew by a fifth. EBIT margins for this business however remained flat, while that of the shrimp feed division expanded to 10.4% as compared to 7.7% in same quarter last year. Margins expansion is mainly due to lower input costs.

  • The company's profits rose by 78% YoY led by a strong operating show coupled with an extraordinary income of Rs 43 m. The latter was on account of refund of countervailing duty from the US customs. Excluding the same, profit growth is in line with the change in operating profits.
What to expect?
At the current price of Rs 2,700, the stock of Avanti Feeds trades at a multiple of about 18.6 times its adjusted trailing twelve month earnings and about 12.4 times our FY17 estimates. Since our recommendation dated 18 February 2015, the stock has moved up by about 80%.

With the broader trends of the shift towards the Vannamei culture remaining in place, it has led to an overall increase in output and thus the demand for fish feed. The fact that shrimp feed production volumes of the company have increased thirteen times in the last four years is a testimony of the same!

Further, the board of the company has approved plans to expand its shrimp feed production capacity by setting up a new plant in Andhra Pradesh (AP). In addition to this, the board has also approved implementation of a new shrimp processing facility in the state. These factors have added to the optimism surrounding the stock. However, given the sharp run up in the stock in recent times, we recommend investors to HOLD on to the stock and NOT buy more at the current levels.

For the purpose of risk mitigation, investors are advised not to have more than 3% to 5% exposure to a particular stock in their portfolio.

To Read the Full Story, Subscribe or Sign In



DISCLOSURES UNDER SEBI (RESEARCH ANALYSTS) REGULATIONS, 2014
INTRODUCTION:
Equitymaster Agora Research Private Limited (hereinafter referred to as "Equitymaster"/"Company") was incorporated on October 25, 2007. Equitymaster is a joint venture between Quantum Information Services Private Limited (QIS) and Agora group. Equitymaster is a SEBI registered Research Analyst under the SEBI (Research Analysts) Regulations, 2014 with registration number INH000000537.

BUSINESS ACTIVITY:
An independent research initiative, Equitymaster is committed to providing honest and unbiased views, opinions and recommendations on various investment opportunities across asset classes.

DISCIPLINARY HISTORY:
There are no outstanding litigations against the Company, it subsidiaries and its Directors.

GENERAL TERMS AND CONDITIONS FOR RESEARCH REPORT:
For the terms and conditions for research reports click here.

DETAILS OF ASSOCIATES:
Details of Associates are available here.

DISCLOSURE WITH REGARDS TO OWNERSHIP AND MATERIAL CONFLICTS OF INTEREST:
  1. 'subject company' is a company on which a buy/sell/hold view or target price is given/changed in this Research Report
  2. Neither Equitymaster, it's Associates, Research Analyst or his/her relative have any financial interest in the subject company.
  3. Neither Equitymaster, it's Associates, Research Analyst or his/her relative have actual/beneficial ownership of one percent or more securities of the subject company at the end of the month immediately preceding the date of publication of the research report.
  4. Neither Equitymaster, it's Associates, Research Analyst or his/her relative have any other material conflict of interest at the time of publication of the research report.
DISCLOSURE WITH REGARDS TO RECEIPT OF COMPENSATION:
  1. Neither Equitymaster nor it's Associates have received any compensation from the subject company in the past twelve months.
  2. Neither Equitymaster nor it's Associates have managed or co-managed public offering of securities for the subject company in the past twelve months.
  3. Neither Equitymaster nor it's Associates have received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past twelve months.
  4. Neither Equitymaster nor it's Associates have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months.
  5. Neither Equitymaster nor it's Associates have received any compensation or other benefits from the subject company or third party in connection with the research report.
GENERAL DISCLOSURES:
  1. The Research Analyst has not served as an officer, director or employee of the subject company.
  2. Equitymaster or the Research Analyst has not been engaged in market making activity for the subject company.
Definitions of Terms Used:
  1. Buy recommendation: This means that the investor could consider buying the concerned stock at current market price keeping in mind the tenure and objective of the recommendation service.
  2. Hold recommendation: This means that the investor could consider holding on to the shares of the company until further update and not buy more of the stock at current market price.
  3. Buy at lower price: This means that the investor should wait for some correction in the market price so that the stock can be bought at more attractive valuations keeping in mind the tenure and the objective of the service.
  4. Sell recommendation: This means that the investor could consider selling the stock at current market price keeping in mind the objective of the recommendation service.
Feedback:
If you have any feedback or query or wish to report a matter, please do not hesitate to write to us.

Small Investments
BIG Returns

Zero To Millions Guide 2018
Get our special report, Zero To Millions
(2018 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

AVANTI FEEDS SHARE PRICE


Dec 15, 2017 01:47 PM

TRACK AVANTI FEEDS

  • Track your investment in AVANTI FEEDS with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks

AVANTI FEEDS 5-YR ANALYSIS

COMPARE AVANTI FEEDS WITH

MARKET STATS