- Gross Income (Q3 FY24): INR1,287 crore, a decrease of 1.9% from Q2 FY24 (INR1,312 crore), and an increase of 13.7% from Q3 FY23 (INR1,132 crore).
- PBT (Q3 FY24): INR116 crore, an increase of INR3 crore from Q2 FY24 (INR113 crore), and an increase of 21% from Q3 FY23 (INR96 crore).
- Total Income (Nine Months FY24): INR4,185 crore, an increase from INR4,062 crore in nine months FY23.
- PBT (Nine Months FY24): INR386 crore, an increase from INR283 crore in nine months FY23.
- Feed Division Gross Income (Q3 FY24): INR958 crore, a decrease from INR1,064 crore in Q2 FY24, and an increase from INR878 crore in Q3 FY23.
- Feed Division PBT (Q3 FY24): INR76 crore, a decrease from INR86 crore in Q2 FY24, and an increase from INR70 crore in Q3 FY23.
- Feed Sales Volume (Q3 FY24): 1,16,318 metric tons, a decrease from 1,27,864 metric tons in Q2 FY24.
- Raw Material Costs (Q3 FY24): 84.83% of feed sale price, compared to 85.53% in Q2 FY24 and 83.6% in Q3 FY23.
- Shrimp Processing Gross Income (Q3 FY24): INR329 crore, an increase from INR253 crore in Q2 FY24, and an increase from INR255 crore in Q3 FY23.
- Shrimp Processing PBT (Q3 FY24): INR40 crore, an increase from INR32 crore in Q2 FY24, and an increase from INR30 crore in Q3 FY23.
- Shrimp Processing Gross Income (Nine Months FY24): INR820 crore, a decrease from INR838 crore in nine months FY23.
- Shrimp Processing PBT (Nine Months FY24): INR104 crore, an increase from INR98 crore in nine months FY23.
- Shrimp Processing Sales Volume (Q3 FY24): 3,990 metric tons, an increase from 2,865 metric tons in Q3 FY23.
Release Date: February 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Gross income for Q3 FY24 increased by 13.7% year-on-year, reaching INR1,287 crore.
- PBT for Q3 FY24 rose by 21% compared to Q3 FY23, indicating improved profitability.
- The shrimp processing and export division saw a 30% increase in gross income in Q3 FY24 compared to Q2 FY24.
- The company is set to commence commercial production at a new shrimp processing plant in March 2024, which is expected to boost capacity.
- Avanti Feeds Ltd (BOM:512573, Financial) is focusing on value-added products, which are expected to enhance profitability and market competitiveness.
Negative Points
- Gross income for Q3 FY24 decreased by 1.9% compared to the previous quarter, Q2 FY24.
- The feed division saw a decrease in gross income by INR106 crore in Q3 FY24 compared to Q2 FY24, mainly due to seasonal changes.
- Raw material costs remain high, with fish meal prices continuing to be elevated due to export demand.
- The shrimp processing and export division experienced an 8.7% decline in export value in FY23 compared to FY22.
- The EBITDA margins have not improved significantly despite higher shrimp processing revenue and stable raw material prices.
Q & A Highlights
Q: In terms of exports of seafood, can you share more light on that and how can we capitalize on this opportunity?
A: Right now, there is a lot of political and social instability in Ecuador, which might benefit us in the short term. Long term, India remains a strong player in the US market due to our focus on higher value products compared to Ecuador. Ecuador's population and processing capabilities are limited, giving us an edge in value-added segments.
Q: What percentage of our raw material costs is wheat, fish, and soya?
A: The total cost of these three raw materials constitutes about 85% of our total raw material costs. However, the exact breakdown varies depending on the type of feed being produced and the prevailing market prices.
Q: What is the outlook for FY25 in terms of topline and bottom line?
A: 2024 appears to be a challenging year, but we expect it to be better than 2023. We anticipate a marginal increase in exports and feed consumption by about 10% to 15%. The impact of government schemes like the Pradhan Mantri Matsya Sampada Yojana will be clearer after the general elections.
Q: Why have EBITDA margins not increased despite higher shrimp processing revenue and stable raw material prices?
A: Raw material prices have been continuously increasing, and we cannot fully pass these costs onto farmers without discouraging shrimp culture. For processing, weaker market conditions in the US have kept EBITDA margins flat despite volume recovery.
Q: How is the environment in terms of passing on raw material price increases for both feed and processed shrimps?
A: For feed, we cannot fully pass on raw material price increases to farmers due to market conditions and government regulations. For processed shrimps, passing on increased expenses to customers is currently difficult due to an oversupply situation, but this may improve as market conditions stabilize.
Q: Given the situation in Ecuador, do you see better prospects for taking realization increases in processed shrimps?
A: In the short term, yes. The instability in Ecuador may lead buyers to prefer sourcing from more stable supply chains like India. However, long-term prospects depend on how quickly Ecuador stabilizes.
Q: What is the long-term growth outlook for the Indian shrimp industry over the next decade?
A: Predicting a decade ahead is challenging due to the volatility in raw material prices and export markets. However, we expect a 5% to 10% growth in the next couple of years. Long-term growth will depend on factors like raw material availability, government policies, and global market conditions.
Q: How do you see the future of the shrimp feed consumption given the competition from Ecuador?
A: While Ecuador is competitive in low-value segments, we focus on higher value-added products. Our new factory is equipped to produce these value-added products, which should help us maintain our edge. The overall shrimp feed consumption is expected to increase as the area of culture expands.
Q: Can you provide more details on the discounts given to dealers and their impact on margins?
A: Discounts vary based on dealer performance and market conditions, ranging from 6% to 8%. These include general discounts, incremental discounts, single fee discounts, and new area discounts. The structure is designed to incentivize dealers while maintaining competitive pricing.
Q: What are the current fish meal prices and how do they impact your costs?
A: Fish meal prices fluctuate based on catches and export demand, currently ranging between INR125 to INR129 per kg. Export demand from countries like Taiwan and Thailand keeps prices high, impacting our raw material costs.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
