Business Model:
Avanti Feeds is the leading manufacturer of Prawn and Fish Feeds and Shrimp Processor and Exporter from India. Avanti Feeds Limited has established joint venture with Thai Union Frozen Products PCL., the world’s largest seafood processors and leading manufacturer of prawn and fish feeds in Thailand with integrated facilities from Hatchery to Shrimp & Fish processing and Exports.
Avanti has Four Prawn and a Fish Feed Manufacturing Units in Kovvur, Vemuluru and Bandapuram in West Godavari District, Andhra Pradesh and Pardi in Valsad District, Gujarat, in India with a capacity of 4,00,000 MT per annum.
The Shrimp Processing and Exports Unit is located in Gopalapuram near Ravulapalem,
Thai Union is closely associated with Avanti Feeds with equity participation, technical collaboration and marketing tie-up in India.
Competitive advantage:
Avanti feeds is the biggest player in the food processing industry. They are the largest manufacturer of shrimp feeds in India. Avanti Feeds Limited stands as a leading provider of high-quality feed, best technical support to the farmer and caters to the quality standards of global shrimp customers. Avanti is proud of a long list of loyal customers from USA, Europe, Japan, Australia & Middle East.
Financials:
Sales growth:
Annual Sales have increased from 2018 Cr in 2016 to 4115 Cr in 2020. The growth is generally consistent around 25-30% growth per annum; except 2019 where it was just 5%. Overall sales have increased to double in 5 years.
EBITDA/ PAT Growth:
EBITDA has increased nearly 2 times from 2016 (229 Cr) to 2020 (454 Cr). PAT has increased in similar lines (slightly higher than EBITDA increase rate mainly driven by higher other income). Interest costs are negligible.
Margin:
The EBITDA margin stayed constant around 13% between 2016 and 2020. PAT margin increased from 8% to 9% in the same period.
ROE: Reduced from 46% to 30% from FY16 to FY20. FY20 ROE is 30%. ROE has been constantly above 27% over the past 5 years.
ROCE: Reduced from 64% to 37% from FY16 to FY20. FY20 ROCE is 37%. ROCE has been constantly above 35% over the past 5 years. FY20 ROCE is the lowest and hence a confirmation of bottoming out of ROCE reduction is needed.
Debt and coverage:
There is negligible debt.
Shareholding:
Promoters hold 43.7% stake and institutions hold 24% stake. Promoter stake has been constant. FII and DII stake have been slightly increasing.
Expensiveness: PE ratios:
Earning per share: Rs. 28, Share price : 531; PE ratio = 19; Price to book ratio = 4;
Industry average PE ratio is 66; Also historically the PE ratio has been between 17 and 22, hence the current PE ratio is around historical averages. The company has strong fundamentals and the PE ratio is around the historical averages.
Dividend Yield : 1%
EV/ EBITDA is 7.2
