Avanti Feeds Limited

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.

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.

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.

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.

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.

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.