Avanti Feeds Limited — Q4 FY25 earnings call

Call held 11 Jun 2025

Management summary

Avanti Feeds delivered a strong Q4 FY25 and full-year FY25 consolidated performance, with PBT increasing significantly due to higher revenue and lower raw material costs. However, the shrimp processing division faced challenges from US tariffs and raw material price increases. The company is diversifying into pet care with promising initial results and actively seeking new export markets to mitigate US market dependence and tariff impacts.

Highlights

  • Consolidated PBT for Q4 FY25 increased by 40% YoY to INR 211 crores (from INR 151 crores in Q4 FY24).

  • FY25 consolidated PBT increased by 37.2% YoY to INR 737 crores (from INR 537 crores in FY24), driven by increased revenue and decreased raw material costs.

  • Shrimp processing and export division saw Q4 FY25 gross income increase by 22% YoY to INR 364 crores (from INR 297 crores in Q4 FY24).

  • Pet care division launched cat food in January 2025, recording sales of INR 25.79 lakhs in Q4 FY25, with positive initial market acceptance.

  • Softening of fishmeal and soyabean meal prices contributed to improved profitability in the feed division.

Concerns

  • Shrimp processing PBT for Q4 FY25 decreased to INR 18 crores from INR 32 crores YoY, primarily due to countervailing duty (CVD) and increased raw material prices.

  • Reciprocal tariffs imposed by the US on shrimp exports, with India facing 26% reciprocal tariffs, impacting competitiveness.

  • Feed sales volume decreased by 2338 MT QoQ in Q4 FY25, and a recent price cut of INR 3 per kg will impact Q1 FY26 profitability.

Key financials

2 periods

Headline

  • Consolidated Gross Income
    ₹1,435 Cr
    YoY +8.7% QoQ +2.1%
  • Consolidated PBT
    ₹211 Cr
    YoY +39.7% QoQ +14.7%

FY25

  • Consolidated Total Income
    ₹5,778 Cr
    YoY +4.9%
  • Consolidated PBT
    ₹737 Cr
    YoY +37.2%

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

SegmentGross IncomePBT
Standalone (Feed and Processing)₹1,070 Cr₹194 Cr
Shrimp Processing and Export Division₹364 Cr₹18 Cr
Pet Care Division——

Capital allocation

high confidence
  • Debt Debt disclosed
    I mean, I would like to look at this differently, if you see the balance sheet, we don't have any borrowings. Totally no borrowings, zero borrowings.
  • M&A Bluefalo Company Ltd., Thailand (Joint Venture) Joint venture · Pending regulatory

    Setting up a pet care product manufacturing company in India with equity investment and technology transfer.

    The company is in the final stage of acquisition of land and planning to commence construction from September or October ‘25, after obtaining a government clearance for setting up of facilities.
  • Liquidity Cash ₹1,900 Cr Surplus funds are used for working capital, saving 15-20% in interest costs, and invested in secured, triple-rated companies for a 7-8% pre-tax return.
    You are saying you require about INR 1,900 crores cash. ... We always go for triple rated companies, secured, and at the same time, we try to maintain 7% to 8% pre-tax return and whatever the amount that is available after utilizing for the working capital requirements.

Guidance & targets

Shrimp Production

  • Estimated Shrimp Production Shrimp Production · 2024 · Medium confidence 10.5-11 lakh MT
    The estimated shrimp production for 2024 is 10.5 lakhs to 11 lakhs metric tons and the feed consumption is estimated to be about same levels.

    — Mrs. Santhi Latha

Feed Consumption

  • Estimated Feed Consumption Feed Consumption · 2024 · Medium confidence 10.5-11 lakh MT
    The estimated shrimp production for 2024 is 10.5 lakhs to 11 lakhs metric tons and the feed consumption is estimated to be about same levels.

    — Mrs. Santhi Latha

Feed Sales Volume

  • Company Feed Sales Volume Feed Sales Volume · FY26 · Medium confidence 5.0-5.6 lakh MT
    Yeah. It would be around 12 lakhs MTs. ... Just marginally, it is more than actually 5 lakhs. It should be able to make around 5 lakhs to 5.10 tons. ... 5.50 to 5.60 tons. Maybe we'll be around the same like last year.

    — Mr. C. Ramachandra Rao, Mrs. Santhi Latha

Shrimp Exports

  • Estimated Shrimp Exports Shrimp Exports · FY26 · Medium confidence 17,000 MT
    It is estimated that the exports during FY'26 would be around 17,000 МТ.

    — Mrs. Santhi Latha

Pet Care Revenue

  • Pet Care Division Revenue Pet Care Revenue · FY26 · High confidence INR 10 crores
    So, it would take some time for the market to catch up to the brand, but this year we're expecting INR 10 crores revenue. That's what our target is.

    — Mr. Alluri Venkata Sanjeev

Pet Care Product Launch

  • Dog Food Launch Pet Care Product Launch · August 2025 · High confidence August 2025
    The dog food will be launched in the month of August and cat food is only 20%.

    — Mr. C. Ramachandra Rao

  • Second Cat Food Flavor Launch Pet Care Product Launch · End of June 2025 · High confidence End of June 2025
    So, the acceptance, as of now, we've launched a cat food and we're planning to launch a second flavor by end of this month.

    — Mr. Alluri Venkata Sanjeev

Profitability

  • Return on Capital Employed (ROCE) Profitability · Long-term · Medium confidence 13-15%
    And we consider that the return on capital should be at the same level on an average around, 13%-14%. If you can get around 15%, that we would consider as a very reasonable and good return on investment.

    — Mr. C. Ramachandra Rao

What to watch in Q1 FY26

Pet Care Dog Food Launch & Acceptance

August 2025 (next quarter)
Current Cat food launched, dog food planned for August 2025
Target Dog food launched, initial sales figures and market feedback

Why it matters

Dog food constitutes 80% of pet food sales, making its successful launch and acceptance crucial for the pet care division's growth trajectory.

The dog food will be launched in the month of August and cat food is only 20%.

Risks & concerns

  • US Tariffs on Shrimp Exports

    high

    India faces a total tariff of 33.12% (ADD 1.35%, CVD 5.77%, reciprocal tariffs 26%) on shrimp exports to the US, impacting competitiveness.

    Management acknowledged

  • Raw Material Price Volatility

    medium

    Prices of key raw materials like fishmeal, soyabean meal, and wheat flour fluctuate due to external factors like fish catches, agriculture, and government MSP policies.

    Management acknowledged

  • Aquaculture Activity Conditions

    medium

    Climate changes, diseases, and other environmental factors determine the consumption of feed in terms of volume, impacting overall company performance.

    Management acknowledged

  • Dependence on US Market for Shrimp Exports

    medium

    The US is a major export market, and tariffs create volatility; the company is actively focusing on diversifying to other markets like Japan, Korea, EU, and Middle East.

    Management acknowledged

Q&A highlights

5 direct, 2 evasive
Stock price decrease Evasive
Can you please come back. Your question is not clear. ... Sir you withdraw this question sir.

Analyst raised a direct concern about recent stock performance, but management did not address it.

Asked by Shivam Sahu

Raw material composition Evasive
Sir, that is our formula. We cannot disclose that. ... And also, I think what our general manager says is that the combination or composition formulation depends upon different grades of products that we are making. And it is a sort of confidential information which we cannot share with anyone.

Management declined to provide specific details on raw material mix, citing confidentiality and variability across products.

Asked by Balaji

Raw material price trend Partial
See, it is fluctuating. Let me tell you, you know, recently the government had increased the MSP of wheat, soya and all these things. I think just a week back. So, immediately the prices have gone up. ... So, it is fluctuating market. The prices of the raw materials keep fluctuating. So, we normally take an annual average, we take the price.

Management clarified that raw material prices are volatile due to government policies (MSP) and harvest cycles, making it difficult to predict a stable trend.

Asked by Balaji

Trump's tariff impact on shrimp exports Direct
So, I think, generally, we'll be number two. We will lose competitiveness over Ecuador, but we'll gain competitiveness again shrimp farming countries in Asia. So, I think overall, it'd be, like, average, not too bad, not too good.

Management provided a nuanced view on how US tariffs affect India's competitive position relative to other shrimp-exporting nations.

Asked by Balaji

Processing division growth and profitability Direct
Okay. That's a good question. See, on the capacity addition, I think there's no more additional capacity that's being added right now. Whatever had to be added is completed and we needed it for multiple different reasons because during season see it's a seasonal business, right? ... The processing margins have fallen down due to, I would say the reason is purely non-operational. Like you mentioned, these are from duties coming from countervailing and anti-dumping.

Management explained that processing growth is impacted by seasonality and that margin compression is due to non-operational factors (tariffs) rather than fundamental business issues.

Asked by Ronak Shah

CVD/ADD review status Direct
No. The review is still happening right now. ... The final determination will be out in the next few weeks. ... It will be from 2023 February if I'm not wrong. ... Yeah. It's retrospective. So, the period of evaluation is not this year, but the previous year, what they're evaluating.

Management provided clarity on the ongoing ADD review, its timeline, and retrospective applicability, which is crucial for understanding potential financial impacts.

Asked by Nitin Awasthi

Pet care business structure Direct
It's a line item. ... It's a line item. Line by line consolidation. It is a subsidiary of Avanti Feed. ... Yes. This is a separate company, SPV (Special Purpose Vehicle), for implementation of this project. And in which the substantial investments of Avanti Feeds are there. So, the consolidation, line by line consolidation takes place in Avanti Feeds accounts.

Clarified that the pet care venture is a subsidiary, not a JV, and will be consolidated line-by-line, impacting financial reporting.

Asked by Nitin Awasthi

Capital allocation of cash Direct
I mean, I would like to look at this differently, if you see the balance sheet, we don't have any borrowings. Totally no borrowings, zero borrowings. ... We always go for triple rated companies, secured, and at the same time, we try to maintain 7% to 8% pre-tax return and whatever the amount that is available after utilizing for the working capital requirements.

Management articulated its conservative capital allocation strategy, prioritizing zero debt, working capital utilization, and safe, moderate-return investments for surplus funds.

Asked by Rahul Rati

3 min read 6 chapters

Detailed narrative

Q4 FY25 and Full-Year Performance Overview

Avanti Feeds reported a robust consolidated performance for Q4 FY25, with gross income reaching INR 1435 crores, an 8.7% increase from INR 1320 crores in Q4 FY24. Consolidated PBT for the quarter surged by 40% YoY to INR 211 crores, up from INR 151 crores in the prior year. For the full fiscal year FY25, total consolidated income grew to INR 5778 crores from INR 5505 crores in FY24, while PBT saw a significant 37.2% increase, reaching INR 737 crores compared to INR 537 crores in FY24, primarily driven by higher revenue and reduced raw material costs.

Raw Material Trends and Profitability

The company experienced favorable raw material price trends, particularly for fishmeal and soyabean meal, which contributed to improved profitability. Fishmeal prices decreased to INR 91 per kg in Q4 FY25 from INR 119 per kg in Q4 FY24, and soyabean meal prices fell to INR 43 per kg from INR 52 per kg over the same period. However, wheat flour prices increased to INR 36 per kg in Q4 FY25 from INR 30 per kg in Q3 FY24. Management noted that raw material prices are subject to fluctuations due to factors like government Minimum Support Prices (MSP) and harvest cycles, making price stability a continuous challenge.

Shrimp Processing and Export Dynamics

The shrimp processing and export division recorded a gross income of INR 364 crores in Q4 FY25, marking an 11% QoQ increase and a 22% YoY increase from INR 297 crores in Q4 FY24. Sales volume for the quarter grew to 4100 MT from 3846 MT YoY. Despite the volume growth, the division's PBT remained flat QoQ at INR 18 crores and decreased YoY from INR 32 crores, primarily due to the full impact of countervailing duty (CVD) and higher raw material prices. For the full year FY25, the division's PBT declined to INR 86 crores from INR 136 crores in FY24.

Pet Care Division Launch and Strategy

Avanti Pet Care Pvt Ltd, a subsidiary, successfully launched its first cat food product, 'Avant Furst' (ocean fish flavor), in January 2025, achieving sales of INR 25.79 lakhs by March 2025. The company plans to introduce a second cat food flavor by the end of June 2025 and will launch dog food, which accounts for 80% of the pet food market, in August 2025. The revenue target for the pet care division in FY26 is INR 10 crores. The company is in the final stages of acquiring land for its manufacturing facility, with construction slated to begin in September or October 2025.

Impact of US Tariffs on Exports

The US has imposed reciprocal tariffs, adding to existing Anti-Dumping Duty (ADD) and Countervailing Duty (CVD) on shrimp imports. India now faces a total tariff of 33.12% (ADD 1.35%, CVD 5.77%, reciprocal tariffs 26%). While this impacts India's competitiveness against Ecuador, it positions India favorably against other Asian countries like Vietnam (46% total tariff) and Thailand (36% total tariff). The company is actively working with the Indian government and industry associations to address these duties and is diversifying its export markets to regions such as Japan, Korea, the EU, and the Middle East to reduce dependence on the US market.

Capital Allocation Philosophy

Avanti Feeds maintains a strong financial position with zero borrowings, reflecting a conservative capital allocation strategy. Management stated that surplus funds, estimated by an analyst to be around INR 1,900 crores, are primarily utilized for working capital requirements, which yields a 15-20% saving in interest costs. The company also invests these funds in secured, triple-rated companies to achieve a pre-tax return of 7-8%. The long-term target for Return on Capital Employed (ROCE) is 13-15%, which management considers a reasonable and ideal benchmark.

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