“India ranks second-largest globally in fish production and aquaculture. Seafood exports are valued at ₹60,000 crore,” Union finance minister Nirmala Sitharaman said in her budget speech on 1 February.
She added that to unlock the marine sector’s untapped potential, the government will establish an enabling framework for sustainable harnessing of fisheries from the Indian Exclusive Economic Zone and the high seas, with a special focus on the Andaman and Nicobar and Lakshadweep islands.
Avanti Feeds Ltd, an integrated seafood company that manufactures and exports animal feed and shrimp products, seems well-placed to benefit from the budget 2025 fisheries and aquaculture push and the expected rise in global demand for shrimp.
The budget boost
Avanti Feeds has emerged as a wealth creator, with its shares soaring 65% since 1 January 2024, far outpacing the Nifty Smallcap 250’s 15% gain during the period. The stock now trades at a price-to-earnings (PE) multiple of 22.5x, slightly above its five-year average valuation of 21.2x.
As of December 2024, Avanti Feeds had limited mutual fund ownership. Bandhan Mutual Fund led the pack with holdings worth ₹279.59 crore, accounting for 0.43% of its equity assets under management (AUM). UTI Mutual Fund followed with ₹72.08 crore, making up just 0.03% of its equity AUM. Major players like SBI Mutual Fund, HDFC Mutual Fund, Aditya Birla Sun Life Mutual Fund, DSP Mutual Fund, and Nippon India Mutual Fund also had small stakes, according to data from Prime Database.
If all goes well, analysts believe Avanti Feeds could be one of the biggest winners of the latest policy push.
Launching a sustainable fisheries management framework aligns perfectly with the growing global demand for certified sustainable seafood, opening doors to exciting new market opportunities.
The government plans to double shrimp exports to ₹1 trillion, backed by the budgetary allocation of ₹2,465 crore for the Pradhan Mantri Matsya Sampada Yojana (PMMSY), up from ₹1,500 crore in 2024-25 revised estimates.
The budget 2025 also proposed slashing the basic customs duty (BCD) on fish hydrolysate for shrimp and fish feed from 15% to 5% and raising the Kisan Credit Card (KCC) loan limit for farmers and fisherfolk from ₹3 lakh to ₹5 lakh. “To enhance India’s competitiveness in the global seafood market, I propose to reduce BCD (basic customs duty) from 30% to 5% on frozen fish paste (Surimi) for manufacture and export of its analogue products,” Sitharaman said.
Earlier, the budget 2024 also announced financial support for nucleus breeding centres for shrimp broodstock and easier financing for shrimp farming through the National Bank for Agriculture and Rural Development (NABARD).
Analysts take
“Avanti, being the largest producer of shrimp feed with a market share of approximately 45-47% (775,000 metric ton capacity) and a shrimp processing capacity of 29,000 metric tonnes, is expected to benefit from these developments,” said Vincent KA, research analyst, Geojit Financial Services.
He anticipated the company’s revenue and profit after tax to grow at a compound annual growth rate (CAGR) of 6% and 22% to around ₹6,050 crore and ₹530 crore, respectively, over FY24-26, with the operating margin expected to improve to around 12% from 8.6% in FY24.
India’s shrimp industry has been battling rough waters, with demand from its biggest export market—the US—losing steam. The challenges began with swelling inventories in the US and fierce competition from Ecuador, driving down demand and prices. Rising freight costs and additional countervailing duties (CVD) in the US squeezed margins further.
To make matters worse, shrimp feed costs have skyrocketed due to supply shortages, with fishmeal prices surging 50% and soya prices soaring 80% in the last three years.
Vincent added that the Indian government’s support for shrimp farmers has limited the company’s ability to fully pass on rising input costs. That said, he believes the outlook for this industry has improved.
“Data on imports to the US indicates that India is regaining market share while Ecuador’s (the major competitor) growth is declining,” said Vincent.
Analysts pointed out that US inventory levels are improving, which should bolster demand and pricing, likely marking the end of the downturn. Additionally, the sharp drop in soybean meal prices is set to provide a strong boost to margin recovery. However, fishmeal prices remain elevated, posing a lingering challenge.
Meanwhile, “Avanti Feeds is also diversifying into the pet food and pet care products sector (estimated industry growth at ~20% CAGR) and is trying to enter the fish feed market,” Vincent said.
“As the market leader with closer to 50% share in India’s shrimp feed industry, Avanti benefits from strategic partnerships with Thai Union and BlueFalo,” said Karthick Jongadla, smallcase manager and founder and chief executive of Quantace Research.
Jongadla added a zero-debt balance sheet, along with vertical integration from hatcheries to exports, and a robust 26% year-on-year profit after tax growth in FY24, showcasing strong financial strength. Moreover, the company is investing ₹250 crore to double processing capacity at its Krishnapuram plant by 2026 and ₹50 crore in R&D to develop sustainable feed.
Avanti Feeds is scheduled to announce its December quarter earnings on 10 February.
It’s not all smooth sailing
Volatile raw material costs, unpredictable weather, and global trade pressures could rock the boat. Investors should keep a sharp eye on raw material prices and the global price recovery in 2025—key factors that could make or break Avanti’s next big rally.
Jongadla explained margins remain under pressure as volatile fishmeal and soybean prices—accounting for 60-65% of feed costs—continue to fluctuate. Additionally, with 80% of operations concentrated in cyclone-prone Andhra Pradesh, geographic risks loom large. Avanti’s heavy reliance on shrimp exports, which contribute 85% of its revenue, exposes it to global market swings, while regulatory hurdles like the 5.77% US CVD and rising competition from Ecuador and Vietnam further add to the headwinds.
Another dampener is the delay in receiving PLI incentives.
In its November 2024 conference call, Avanti Feeds confirmed its eligibility for a 6% incentive on raw products and 10% on value-added products for incremental sales over six years (FY22–FY27). The maximum incentives are capped at ₹79.44 crore, contingent on a minimum 5% CAGR in sales. As of September 2024, the company had received ₹16.77 crore, including incentives from FY23.
Still, the key growth drivers seem firmly in place.
“The global shrimp market is projected to grow at a 5.5% CAGR (2024–31), supported by health-conscious consumption and rising demand from the European Union (EU), which increased to 19% market share in Q2FY25 from 4% on-year,” said Jongadla.
Also, Avanti Feeds is diversifying with a ₹130–150 crore pet food joint venture and fish feed trials to reduce its dependence on shrimp, he added.
Avanti Feeds is mitigating risks through EU diversification and premium product shifts.
“With a focus on automation, training 150 apprentices by March 2025, and expanding Krishnapuram’s value-added capacity to 29,000 metric tonnes, the company is well-positioned for 25%+ EPS growth,” added Jongadla.
However, long-term growth hinges on stabilizing raw material costs, enhancing infrastructure, and maximizing the benefits of government initiatives.
