Avanti Feeds Limited — Q3 FY25 earnings call

Call held 24 Feb 2025

Management summary

Avanti Feeds reported a mixed Q3 FY25 with consolidated gross income rising to INR 1,405 crores and PBT increasing by 14% QoQ to INR 184 crores, driven by improved feed division performance due to softening raw material costs and higher sales volumes. However, the shrimp processing division faced margin pressure from increased raw material prices, CVD, and higher freight costs. The company commenced pet food trading and is progressing with its fish feed and pet food manufacturing plant plans, while also focusing on expanding global markets for shrimp exports and value-added products.

Highlights

  • Consolidated Gross Income for Q3 FY25 was INR 1,405 crores, an increase of INR 8 crores QoQ and INR 118 crores (9.17%) YoY.

  • Consolidated PBT for Q3 FY25 increased by INR 22 crores QoQ to INR 184 crores, representing a 14% increase.

  • Standalone Feed Division PBT for Q3 FY25 increased by INR 21 crores QoQ to INR 166 crores, a 15% increase.

  • Shrimp feed sales volume in Q3 FY25 increased by 15,731 MT YoY, reaching 132,049 MTs.

  • Pet food trading successfully commenced in January 2025, with initial good acceptance in five cities.

Concerns

  • Shrimp Processing Division PBT decreased by INR 5 crores QoQ to INR 18 crores in Q3 FY25, and by INR 36 crores YoY for 9M FY25 due to increased raw material prices, CVD, higher ocean freight, and new plant depreciation.

  • Wheat flour prices are a concern, currently at INR 36/kg, though a fresh crop in March is expected to bring some reduction.

  • CVD of 5.77% on shrimp exports to the US remains an additional burden, impacting margins.

Key financials

  1. Consolidated Gross Income ₹1,405 Cr +9.2%YoY
  2. Consolidated PBT ₹184 Cr +58.6%YoY
  3. Standalone Feed Gross Income ₹1,077 Cr +12.4%YoY
  4. Standalone Feed PBT ₹166 Cr +118.4%YoY
  5. Shrimp Processing Gross Income ₹328 Cr -0.61%YoY
  6. Shrimp Processing PBT ₹18 Cr -55%YoY

What they filed

Q1 FY27: revenue up 26.7%, net profit down 49.7% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,079 1,042 1,032 1,235 1,156 +7%945 −9%1,039 +1%1,565 +27%
EBITDA113 142 166 188 145 +28%134 −6%129 −22%71 −62%
Net profit106 127 144 167 135 +27%129 +2%107 −26%84 −50%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Share of Gross Income
₹1,405 Cr Total
  • Standalone Feed Division ₹1,077 Cr 76.7%
  • Shrimp Processing and Export Division ₹328 Cr 23.3%

Capital allocation

high confidence
  • Capex Capex disclosed
    • Land purchase for pet food manufacturing facility near Hyderabad ₹36 Cr
    • Plant and machinery for pet food manufacturing facility ₹60 Cr
    Yes. See, we are expecting that, see, the land has been purchased and we are in the process of getting the approvals as survey and other things. And also, we are in consultation with Bluefalo Thailand. We are preparing the drawings of the factory and list of plant and machinery, indigenous imported and other civil works, all these planning works is progressing. So, once we start, we are expecting that by end of '26, we should be able to come out with our own production by end up December '26. ... Capex, we have already incurred a land purchase about around INR 36 crores. Further, the plant and machinery will be around INR 60 crores.

Guidance & targets

Capacity

  • Shrimp Processing Capacity Utilization Capacity · next 4 to 5 quarters · High confidence 80%
    Net through the year were about 60% to 65% and this will be scaled up to at least 80% in the next 4 to 5 quarters.

    — Alluri Nikhilesh

Volume

  • Shrimp Processing Raw Material Volume Volume · next 4 to 5 quarters · High confidence 28,000 to 30,000 tons
    So, we're talking raw material about 28,000 to 30,000 tons in the next 4 to 5 quarters?

    — Alluri Nikhilesh

  • Shrimp Feed Production Growth (India) Volume · next year · Medium confidence 5% or 10% increase
    So, we normally expect see the next year we are expecting about a 5% or 10% increase.

    — C. Ramachandra Rao

  • Shrimp Production (India) Volume · this year · Medium confidence 5% more than last year
    So we expect that the production would be on the same levels as in the last year and maybe slightly about 5% more than what was in the last year.

    — C. Ramachandra Rao

Raw Material Price

  • Fish Meal Price Raw Material Price · ongoing · Medium confidence INR 95-100 per kg
    So that is one of the reasons where the prices are looking more stable with maybe around INR 100, we are expecting that it should be varying between INR 95 to INR 100. That's what we are looking for as far as the fish meal is concerned.

    — C. Ramachandra Rao

  • Wheat Flour Price Raw Material Price · near term · Medium confidence INR 36-37 per kg
    It should be around INR 36, INR 37. It should be INR 35 to INR 40. It should be between that. But it is really, bit of, concern.

    — C. Ramachandra Rao

Market Size

  • Indian Pet Food Market Size (Value) Market Size · ongoing · High confidence INR 50,000 million
    The market size is expected to be around INR 50,000 million, growing at a 20% CAGR year-on-year.

    — Santhi Latha

  • Indian Pet Food Market Size (Volume) Market Size · ongoing · High confidence 221,000 to 310,000 metric tons
    So, the total market size is around 221,000 or around 225,000 to 310,000 metric tons.

    — Santhi Latha

Pet Food

  • Dog Food Launch Pet Food · July 2025 · High confidence by July
    and also the dog food maybe by July.

    — A. Venkata Sanjeev

  • Pet Food Plant Production Start Pet Food · December 2026 · High confidence end of December 2026
    So, once we start, we are expecting that by end of '26, we should be able to come out with our own production by end up December '26.

    — C. Ramachandra Rao

Exports

  • Feed Export as % of Sales Exports · future · Medium confidence 10%
    Yes, around 10% we would like to reach.

    — Santhi Latha

Market context

  • Global Shrimp Market Growth Volume · 2025 · Medium confidence 5% marginal increase
    Overall, the global market for shrimp expected to be safe and stable in 2025 compared to 2024 maybe with a marginal increase by about 5%.

    — C. Ramachandra Rao

What to watch in Q4 FY25

Pet Food Plant Capex and Timeline

next quarter or after that quarter meeting
Current Land purchased (INR 36 crores), plant & machinery (INR 60 crores) planned, production by Dec 2026.
Target Updated definitive capex numbers and detailed project timelines.

Why it matters

To track the progress and financial commitment for the new pet food manufacturing facility.

All these things, I think it will take at least four, three, four months for us to come to a definitive number. They are at least the projected numbers. We'll be able to share with you maybe next or after that quarter meeting.

Risks & concerns

  • Countervailing Duty (CVD) on US Shrimp Exports

    high

    The 5.77% CVD imposed by the US government on shrimp exports is an additional burden, impacting the profitability of the shrimp processing division, leading to efforts in cost optimization and market diversification.

    Management acknowledged

  • Shrimp Processing Margin Pressure

    high

    Shrimp processing margins are under pressure due to increased raw material prices, the CVD, higher ocean freight rates, and depreciation from new plant assets.

    Management acknowledged

  • Wheat Flour Price Volatility

    medium

    Wheat flour prices are a concern at INR 36/kg, influenced by government procurement policies (FCI) which limit open market sales, though a fresh crop in March might offer some relief.

    Management acknowledged

  • Red Sea/Suez Canal Impact on Freight Costs

    medium

    Freight costs remain firm due to ongoing geopolitical issues affecting the Red Sea/Suez Canal, though management hopes for a reduction this year.

    Management acknowledged

  • Competition in Pet Food Market

    low

    The pet food market has well-established players, requiring the company to compete effectively and establish its brand before full-scale production.

    Management acknowledged

Q&A highlights

8 direct
Pet Food Plant Timeline and Capacity Direct
So, once we start, we are expecting that by end of '26, we should be able to come out with our own production by end up December '26.

Provides a clear timeline for the new pet food manufacturing facility and its operational start.

Asked by Nitin Awasthi

Shrimp Processing Capacity Utilization Direct
Net through the year were about 60% to 65% and this will be scaled up to at least 80% in the next 4 to 5 quarters.

Clarifies current and target capacity utilization for the processing segment, indicating future growth potential.

Asked by Nitin Awasthi

Raw Material Price Trends Direct
The price of fish meal decreased in Q3 to INR 93 per kg from INR 105 per/kg in Q2 FY '25... In case of soyabean meal, their prices reduced to INR 46 per/kg... However, the wheat flour prices increased to INR 35 per/kg in Q3 FY '25 from 32 per/kg in Q2 FY '25.

Provides specific price movements for key raw materials, crucial for margin analysis, and highlights concern over wheat flour.

Asked by Nitin Awasthi

Pet Feed Business Market Size and Margins Direct
The market size is expected to be around INR 50,000 million, growing at a 20% CAGR year-on-year... As of now, we are reporting for the margins would be lesser and also, we are spending a lot on marketing.

Gives an overview of the pet food market potential and management's expectation of lower initial margins due to market entry costs.

Asked by Kamal Sharma

Feed Business Export Growth Direct
As of now, it is around 1% to 2%. Yes, around 10% we would like to reach.

Quantifies current export contribution and sets a clear target for future growth in the feed business.

Asked by Jasdeep Walia

Ecuador Shrimp Production Outlook Direct
It's quite stable right now. There won't be like increasing scaling up the production like 30%, 40% like they were doing in the past. So, we have to see what will happen. But I think it's going to be a fairly stable year for them and not much increases.

Provides insight into a major competitor's production stability, which impacts global shrimp supply and pricing.

Asked by Jasdeep Walia

Fish Feed Plant Investment Strategy Direct
No. We're testing the feed, sir. We're importing the feed from Thailand and testing it for we're testing the results. ... So, once this testing process will be complete, then you would think about what kind of Capex you want to put into this business?

Clarifies that the company is in the trial phase for fish feed and will only commit to capex after successful testing, indicating a cautious approach.

Asked by Jasdeep Walia

Shrimp Processing Margins and CVD Impact Direct
The duty CVD that was imposed by the U.S. Government, it's a new duty, right? If you remove that duty, I think it's like, you know, it benefits the margin to move up. So that's an important factor.

Highlights the direct impact of CVD on processing margins and management's strategy to mitigate it through cost optimization, value-added products, and market diversification.

Asked by Mithun Aswath

3 min read 6 chapters

Detailed narrative

Q3 FY25 Consolidated Performance Overview

Avanti Feeds reported a consolidated gross income of INR 1,405 crores for Q3 FY25, marking an increase of INR 8 crores QoQ and INR 118 crores (9.17%) YoY. The consolidated PBT for the quarter stood at INR 184 crores, reflecting a 14% QoQ growth from INR 162 crores in Q2 FY25 and a significant 59% YoY increase from INR 116 crores in Q3 FY24. For the nine months ended December 31, 2024, total income rose to INR 4,343 crores from INR 4,185 crores in the prior year, with PBT increasing to INR 526 crores from INR 386 crores, driven by higher revenue, reduced raw material costs, and improved overhead absorption.

Feed Division's Robust Performance

The standalone feed division demonstrated strong performance in Q3 FY25, achieving a gross income of INR 1,077 crores. The PBT for this division increased by 15% QoQ to INR 166 crores, and a substantial 118% YoY to INR 166 crores from INR 76 crores in Q3 FY24. This positive trend was largely attributed to the softening prices of key raw materials; fish meal decreased to INR 93/kg from INR 105/kg QoQ, and soyabean meal reduced to INR 46/kg from INR 49/kg QoQ. Feed sales volume for the quarter was 132,049 MTs, showing a healthy increase of 15,731 MTs compared to Q3 FY24.

Shrimp Processing Division Faces Headwinds

The shrimp processing and export division experienced challenges, with its PBT declining by INR 5 crores QoQ to INR 18 crores in Q3 FY25. For the nine-month period, PBT decreased by INR 36 crores YoY to INR 68 crores. This decline was primarily due to several factors including increased raw material prices, the 5.77% Countervailing Duty (CVD) imposed by the US, higher ocean freight rates, and depreciation from a new plant. Management is actively working on cost optimization, focusing on value-added products that do not attract CVD, and diversifying export markets beyond the US to mitigate these pressures.

Entry into Pet Food Market

Avanti Pet Care successfully launched its cat food product, 'Avant Furst,' in January 2025, with plans to introduce dog food by July. The Indian pet food market is estimated to be around 40 million pets, with a market size of INR 50,000 million and a 20% CAGR. The company has acquired 30 acres of land near Hyderabad for a manufacturing facility, with an estimated capex of INR 36 crores for land and INR 60 crores for plant and machinery. Production is targeted to commence by the end of December 2026, with an initial focus on the domestic market.

Strategic Approach to Fish Feed Business

Avanti Feeds is adopting a cautious and strategic approach to the fish feed business. The company is currently importing fish feed from Thai Union Feed Mill Limited to conduct trials under Indian conditions. A decision on setting up a domestic manufacturing plant will be made only after these trials prove successful and the product's performance and profitability are thoroughly evaluated. This ensures that any future investment in this segment is based on robust market acceptance and operational viability.

Raw Material and Aquaculture Outlook

While fish meal and soyabean meal prices have shown stability or softening, wheat flour prices remain a concern at INR 36/kg, largely due to government procurement policies limiting open market sales, though a fresh crop in March is anticipated to bring some relief. The overall aquaculture industry is expected to remain stable in 2025, with Indian shrimp production potentially increasing by about 5% YoY. The company aims to increase its feed export share from the current 1-2% to a target of 10% in the coming years, alongside a focus on value-added products in shrimp processing.

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