Navratan SIP on Zee Business: In today’s edition of Navratna SIP on the occasion of Navratri, Zee Business research analyst Ashish Chaturvedi recommended Avanti Feeds Limited (NSE: AVANTIFEED ) for investment. Avanti Feeds is one of the largest seafood companies in India and a clear leader in the shrimp feed segment with a market share of over 45%.
According to the Zee Business analyst, this is a very good time to invest in companies related to shrimp and shrimp feed as there has been a huge increase in demand from both the US and China lately.
“Currently, the price of shrimp in the international market is about $9 per kg. At the same time, there has been a steady decline in the prices of raw materials for shrimp. For example, soybean meal is a important raw material for shrimp processing. Feed and soybean meal prices have fallen by about 30% year-on-year. Several experts believe that EBITDA (Earnings before interest, taxes, depreciation and depreciation) per kg of the shrimp segment may cross Rs 8,” Chaturvedi said.
Interestingly, the company has recently completed its expansion plan worth Rs 150 crore and this will help the company to increase its capacity by at least 30%.
The fundamentals of the company are very strong as it has seen good growth in its business and despite so many expansions, Avanti Feeds is completely debt free.
Institutional investors have a strong belief in this company as Foreign Institutional Investors (FIIs) hold over 14% stake in Avanti Feeds and Domestic Institutional Investors (DIIs) hold over 8.7% stake.
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Talking about the strong demand for shrimp feed, Zee Business Managing Editor Anil Singhvi said that Avanti Feeds will reap double the benefits of increased demand and falling rupee as they are mainly in the export business.
“The Indian rupee has fallen to around Rs 81.50, so the profit margin will definitely increase,” Singhvi said.
Singhvi also said that the company is well valued as it has a market capitalization of around Rs 6.5 billion and has around Rs 1,000 crore in cash.
“The company has no debt, there’s cash flow and everything else is in the company’s favor, so there’s very little chance of things going wrong in this case,” he added.
Avanti Feeds Ltd Share Price Target: Rs 600 (Short Term)
In the long term, investors can set the target at Rs 675 and Rs 775.
