Avanti Feeds Ltd (NSE: AVANTIFEED) Q3 2026 Earnings Call dated Mar. 03, 2026
Corporate Participants:
Karthikayan — Moderator
C. Ramachandra Rao — Joint Managing Director, Chief Financial Officer, and Company Secretary
Shanti Latha — General Manager, Finance and Accounts
D.V.S. Satyanarayana — Chief Financial Officer
K. Srinivas Reddy — Chief Financial Officer
Alluri Nikhilesh — Non-Executive Director
A. Venkata Sanjeev — Executive Director
Operator
Analysts:
Nitin Awasthi — Analyst
Arjun Khanna — Analyst
Ronak Shah — Analyst
Unidentified Participant
Presentation:
Karthikayan — Moderator
Good evening, ladies and gentlemen. I am Karthikayan, Moderator for the conference call. Welcome to Avanti Feeds Limited Q3FY26 Earnings Conference Call. We have with us today Mr. C. Ramachandra Rao, Joint Managing Director, CFO, and Company Secretary; Shri. A. Venkata Sanjeev, Executive Director of Avanti Feeds Limited and Avanti Pet Care Private Limited; A. Nikhilesh, Director, Avanti Feeds Limited and Executive Director, Avanti Frozen Foods Private Limited; Mrs. B. Shanti Latha, GM Finance and Accounts, Avanti Feeds Limited, Mr. DVS Satyanarayana, CFO, Avanti Frozen Foods Private Limited; and Mr. K.S. Reddy, CFO Avanti Pet Care Private Limited.
As a reminder, all participants will be in listen-only mode. And there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions]. I would now like to hand over the floor to Mr. C. Ramachandra Rao, Joint Managing Director, CFO, and Company Secretary. Thank you and over to you.
C. Ramachandra Rao — Joint Managing Director, Chief Financial Officer, and Company Secretary
Thank you, Mr. Karthik. Good evening, ladies and gentlemen. I am pleased to extend a warm welcome to all of you for this investor’s conference call to review the unaudited financial results for Q3FY26 and for the period ended 31 December 2025. Mr. Venkata Sanjeev and Mr. Niklesh, Executive Directors are joining from the shrimp feed and processing plants, respectively. Along with me here are Mrs. Shanti Latha, GM Finance and Accounts, DVS Satyanayana, CFO of Avanti Frozen, and K. Reddy, CFO of Avanti Pet Care Private Limited. To begin with Mrs. Shanti Latha will present highlights of financial results for the quarter ended 31 December ’25 of Shrimp Feed Division and also consolidated financials of the company for the same period. Thereafter, Mr. DVS Satyanayana will present the financial highlights of Shrimp Processing and Export Division. Thereafter, K. Srinivas Reddy will present the status of Pet Care project. After presentation by all of them, we’ll take a question and answer session. Over to Mrs. Shanti Latha.
Shanti Latha — General Manager, Finance and Accounts
Thank you, sir. Good evening, everyone. Now, I’ll take you through the consolidated and standalone financial performance highlights for the quarter and nine months ended 31st December, 2025. So, first we’ll go through the consolidated financial results. For the quarter ended December 26 — Q3 ’26 results. So the comparative performance of Q3 FY26 with that of Q2 FY26 and Q3 FY25 have been given in the presentation. Already circulated gross income in Q3 FY26 is INR1,447 crores as compared to INR1,659 crores in the previous quarter of Q2 FY26, a decrease of INR212 crores by about 12.78%.
Compared to Q3 FY25 gross income of INR1,405 crores, there is an increase of INR42 crores by about 2.99%. The PBT for the Q3 FY26 is INR222 crores as compared to INR227 crores in Q2 FY26, a decrease of INR5 crores by 2.2% and compared to Q3 FY25 PBT of INR184 crores, there is an increase of INR38 crores by about 20.65%. The nine month results — financial results for the nine months ended 31st December 2025 is the comparative performance of nine months FY26 with that of nine months FY25 are also given in the presentation already circulated. Gross income in nine months FY26 is INR4,761 crores as compared to INR4,341 crores in nine months of FY25, an increase of INR420 crores by 9.67%.
The PBT is INR698 crores in nine months FY26 as compared to INR526 crores in nine months FY25, an increase of INR172 crores by about 32.7%. The consolidated results indicate net impact of several factors such as increase or decrease in income expenditure and exceptional items, relating to both feed and frozen divisions, which will be discussed in the divisional performance of these units individually.
So, standalone financial results of Feed Division, so Q3 FY26 results, the gross income for the Q3FY26 is INR993 crores as compared to INR1,200 crores in the previous quarter of Q2 FY26, a decrease of about INR207 crores due to decrease in the quantity of feed sold. The gross income in Q3 FY26 decreased to INR993 crores from INR1,073 crores in the corresponding quarter of Q3 FY25, a decrease of INR80 crores. This is offset by the decrease in the sale price and also increase in sales quantity by 13,922 MT. The PBT for Q3 FY26 is INR172 crores as compared to INR180 crores in Q2 FY26, a decrease of INR8 crores by 4.44%. Since Q2 is the main reason for the aquaculture industry. And compared to Q3 FY25 PBT of INR167crores, there is an increase of INR5 crores by 2.99%, mainly due to decrease in raw material cost. The feed sales decreased to 1,18,127 MTs in Q3 as compared to 1,54,644 MTs in Q2 FY26 and from 1,32,049 MTs in Q3 FY25.
So the nine months FY26 results. Gross income in nine months FY26 is INR3,471 crores as compared to INR3,484 crores in nine months FY25, a decrease of INR13 crores by 0.37%. The PBT is INR576 crores in nine months FY26 as compared to INR465 crores in nine months FY25, an increase of INR111 crores by 23.87%. The feed sales increased to 4,38,335 MTs in nine months FY26 as compared by 4,25,537 MTs in nine months FY25. The major raw materials of feed are fish meal, soya bean meal, and wheat flour. The noticeable development in this quarter is increasing trend of two major raw materials, that is, fish meal and soya bean meal, resulting in decrease in the profitability when compared with previous quarter. The prices of these raw materials keep fluctuating since their production is based on agriculture and fish catches from the ocean. The prices of fish meal increased in Q3 FY26 to INR117 per kg from INR98 in Q2, and increased from INR93 per kg in Q3 FY25.
In case of soya bean meal, their prices increased to INR43 per kg in Q3 FY26 from INR43 in Q2 FY26 and decreased from INR46 in Q3 FY25. However, the wheat flour price decreased to INR32 per kg in Q3 FY26 from INR33 per kg in Q2 FY26 and INR35 per kg in Q3 FY25. The present purchase price of fish meal is INR145 per kg, soya bean meal is INR56 per kg, and wheat flour is INR32 per kg. While on one hand the raw materials are instrumental in determining the margins, on the other hand, the status of aquaculture activity conditions such as climate, diseases, etc., determine the consumption of feed in terms of volume, which will have an impact on the overall performance of the company.
The PBT stood at 16% on revenues during the nine month period ended 31st December ’25, as compared to 13.3% during the corresponding period of the previous year, that is, 31st December, 2024. The full impact of reduced and stabilized raw material prices during the nine months of FY26 enabled to achieve 16% PBT. Considering continued steep increase in prices of major raw material like fish meal and soya bean meal during the past three months, which will have an impact on Q4 FY26, the PBT for the FY26 is expected to be around 14.5% to 15%.
To sum up, in general, FY25-’26 is expected to be a mix of favorable and challenging seasons for the aquaculture industry, both in respect of shrimp production as well as exports from India and global demand for shrimp exports. However, considering the performance during the first nine months of FY26 as compared to performance during nine months of FY25, the results are likely to register marginal improvement. Shrimp production and feed consumption FY25 and company plans for FY26, on the basis of estimated shrimp production of about 8 lakh to 9 lakh MTs in calendar year 2025, the feed consumption is estimated to be about 11 lakhs to 12 lakh metric tons. The company’s feed sales during the nine months FY26 is 4,38,335 MT against 4,25,537 MT in nine months ’25. It is estimated that the feed sales during FY26 would be around 5,55,000 MT.
Shrimp Processing and Export, the export of frozen shrimp during ’24-’25 was to the tune of 7,41,529 MT, worth USD5,177.01 million. USA is the largest importer with 3,11,948 MT of frozen shrimp, followed by China 1,36,164 MT, European Union 99,310 MT, Southeast Asia 58,003 MT, Japan 38,917 MT, Middle East 32,784 MTand other countries 64,403 MT. Frozen shrimp contributed to the major item of export in terms of quantity and value, accounting for a share of 43.67% in quantity and 69.46% of the total US dollar earnings. Frozen shrimp exports during ’24-’25 increased by 8.3% in value terms, and 6.06% in US dollar terms, and 3.56% by volume. The company shrimp exports during FY25 was 14,149 as compared to 13,444 in FY24, an increase of 682 MT. It is estimated that the exports during FY26 would be around 16,500 MT.
Now, I hand over to Mr. DVS Satyanarayna to present highlights of Shrimp Processing and Export division.
D.V.S. Satyanarayana — Chief Financial Officer
Thank you, madam. Good evening, everyone. Now, I would like to take you through the financial highlights of Shrimp Processing and Export division Q3 FY 2026 results, the gross income for Q3 FY 2026 was INR455 crore as compared to INR462 crores in Q2 FY 2026, a decrease by INR7 crores, representing 1.5% mainly due to decrease in sales quantity by 1,095 metric tonnes, which represents 23%. However, the increase in other income during Q3 FY 2026 partially offset the impact of the lower sales volume. The gross income in Q3 FY 2026 increased to INR455 crores from INR328 crores during Q3 FY 2025, an increase of INR127 crores, representing 39% year-on-year growth.
Higher sales in Q3 FY 2026 was driven by an increase in average selling price realization, favorable foreign exchange rate, and increase in other incomes. The profit before tax, before exceptional item for Q3 FY 2026 stood at INR52 crore compared to INR53 crores in Q2 FY 2026, reflecting a marginal decrease mainly due to other income. The profit before tax in Q3 FY 2026 was INR52 crore, an increase from INR18 crores in the corresponding quarter, that is, Q3 FY 2025, reflecting a significant increase primarily due to improved sales price realization, favorable foreign exchange rates, higher other income, and a reduction in ocean freight rates.
Comparison of performance for nine months ended 31st December 2025 with nine months ended 31st December 2024. The gross income for nine months during FY 2026 was INR1,296 crore as compared to INR855 crores in the corresponding nine months period of previous year, that is, financial year 2025. An increase of INR441 crores, representing 52% in the gross income during nine months of FY 2026 is mainly due to increase in sales quantity by 2,804 metric tonnes, representing 28% growth and also improved sales — average sales price realization. The profit before tax for the nine months ended FY 2026 stood at INR130 crores, compared to INR68 crores for the corresponding period in FY 2025, reflecting an increase of INR62 crores in the PBT. This growth is mainly attributable to higher sales volumes, improved sales price realization, favorable foreign exchange rates, increased other income, and also there is a marginal reduction in ocean freight rates.
With this frozen results are completed. Now, I hand over to Mr. K. Srinivas Reddy to update the status of Pet Food project. Thank you
K. Srinivas Reddy — Chief Financial Officer
Thank you, Mr. DVS Satyanarayana. Good evening, all. Now, I would like to update our pet food project. As already informed company commenced their trading in cat food and dog food under the Avanti Pet Case brand that is Avant Furst, the company is planning to expand its portfolio with the additional flavors in a due course. From response from the pet owners for the both cat and dog food has been highly positive with a strong market acceptance and observed across all regions. During Q3 FY25-’26, the company recorded sales of INR136.2 lakhs compared to INR95.08 lakhs in Q2 FY25-’26, reflecting continued growth movement. The growth was driven by the increasing [Indecipherable] of our cat food product as well as the steady traction in the dog food segment.
On the market expansion, the company is strengthening its presence in Tier 1 cities and has initiated expansion into Tier 2 and Tier 3 markets. E-commerce operations, our products are now live on Supertail and Amazon platform strengthening our presence and improving accessibility for our customers nationwide. The company continues to focus on building strong brand visibility for Avant Furst through the ongoing digital market campaign in Instagram and Facebook that is Avant Furst, enhancing customer awareness and brand engagement across our target audience.
On the project side, as informed earlier, the company has purchased a land near Hyderabad converted from agriculture to non-agriculture use, for setting up a state-of-the-art manufacturing facilities, the land development works are in progress, and we are in the final stage of finalizing the design and drawings. Upon completion of the detailed project report and the receipts of necessary government approval, construction activity will commence. Now, I hand over to JMD sir for closing remarks.
C. Ramachandra Rao — Joint Managing Director, Chief Financial Officer, and Company Secretary
Thank you, Mr. KS Reddy. As anticipated, the first season of shrimp culture of this year commenced with highly positive expectation by farmers and all the stakeholders. The farmers preparing ponds and stocking from mid February 26 and the stockings are going on impressively. Along with the increase in shrimp culture this year, as expected the volume of feed sales also will increase. However, the prices of raw material — major raw material particularly fish meal and soya bean meal are increasing steeply as explained by my colleague earlier, impacting on margins. We do hope that prices of these raw materials will stabilize during the course of the year.
Reviewing the status of shrimp exports, we have been discussing on impact of reciprocal tariff imposed by US on imports of shrimps from India, as you all know, there has been a high degree of uncertainty on levy of reciprocal tariff and extent of its impact on seafood industry. It is a positive development to see withdrawal of 25% duty imposed as a penalty for import of Russian oil. It has given much-needed relief to the export of shrimps to USA. Further, the other 25% duty has also been removed. However, the US government chose to levy import surcharge of 10% on imports, but uncertainty whether it is increased to 15% still exists, awaiting clarity.
Overall export environment also poised to be more encouraging with the tariffs coming down and the company working on exports to other global markets. As you are aware, on 28 February 2026, the US Supreme Court ruled in a 6-3 decision that International Emergency Economic Powers Act IEEPA does not authorize the US President to impose tariffs or imports because the act does not grant clear statutory authority to levy taxes or duties, a power reserved for Congress. As a result of the ruling, IEEPA based tariffs including reciprocal duties previously imposed were invalidated and are no longer legally enforceable.
US Customs and Border Protection stopped collecting these IEEPA tariffs effective from 24 February, 2026 by deactivating the related tariff courts. However, the Supreme Court’s opinion did not directly address the refund for the duties already collected. Importers may need to pursue refunds through customs process or litigation. Within hours of the decision, the US Administration introduced a new temporary global import surcharge under Section 122 of the Trade Act of 1974, initially set at 10% and subsequently announced to be raised at 15%, effective from 24 February for up to 150 days. The new surcharge effectively replaces the IEEPA tariffs, but under a different statutory authority. Having said so much about this tariff, Mr. Nikhilesh would be able to give more — throw more light on this subsequently later on in the course of question and answer discussions.
Now, I’ll just give the highlights of the union budget announced recently. The government has increased allocation to the fisheries sector under schemes such as Pradhan Mantri Matsya Sampada Yojana with continued focus on aguaculture value chain development and export promotion. The customs duty on imported shrimp fee has been reinstated at 15%, but withdrawing concession duty at 5% given in the budget of the previous year that is 2025. This has been — the association has been pursuing with the government for reinstating 15% duty because the imported feed was available at highly reduced prices, making a big competition for the domestic feed manufacturers.
This step would help domestic feed suppliers to compete with the imported shrimp feed. The budget emphasizes strengthening cold chain processing infrastructure and export ecosystem, which is expected to support shrimp processors and exporters. Earlier custom duty rationalization on key feed and processing imports continues to improve cost competitiveness for shrimp feed manufacturers and exporters. Overall, policy direction remains supportive of seafood exports with a focus on enhancing global competitiveness and boosting value addition.
I think with this we will take up the questions from the investors. I think we can start this question-and-answer session.
Operator
Thank you, sir.
C. Ramachandra Rao — Joint Managing Director, Chief Financial Officer, and Company Secretary
Over to you, Mr. Karthik.
Questions and Answers:
Operator
Thank you, sir. Ladies and gentlemen, we will now begin the question and answer session. [IOperator Instructions] First question comes from the line of Nitin Awasthi from InCred Capital. Please go ahead.
Nitin Awasthi
Hello, sir. I have three questions on your core business and two questions on the new pet food business.
C. Ramachandra Rao
Awasthi, you are not audible. Can you just speak a bit louder?
Nitin Awasthi
Am I clearly audible now?
C. Ramachandra Rao
Now, it’s okay.
Nitin Awasthi
Okay. So three questions on your core business, two on the pet food business. I’ll start with the core business. So, we are going to have UK’s trade deal be implemented first. The talks are probably from April. We’ll have the implementation of the UK trade deal and EU by the end of the year. Given that, if these — when these trade deals are implemented, the duty reduction is substantial. Do you see the end market size as a whole increasing?
C. Ramachandra Rao
I think Nikhilesh would take this call on this question.
Alluri Nikhilesh
Could you repeat the question, please?
Nitin Awasthi
So, given that UK trade deal and EU trade deal, of course EU is expected by the end of this year or beginning of next year and UK by April this year is going to be at a substantially what you call lower the tariff rates. Because in EU we had tariffs up to 26%. In UK we added up to 9%. So given this scenario, do you see the market in EU expanding for shrimps itself because suddenly the price will drop and become more competitive against other proteins?
Alluri Nikhilesh
Yes, I would definitely say that the market access into EU and UK would be better. There’d be higher demand coming from these markets. Yes, 100% because they’re reducing duty.
Nitin Awasthi
Understood. And on UK, are we already collaborating for April sales without duty or is it still undecided?
Alluri Nikhilesh
I think these policies have been announced, these agreements have been announced. But what the industry is watching is when and how quickly are they implemented? So, there’s no news on the implementation — official news on the implementation date. We’re hoping that it comes into effect quickly.
C. Ramachandra Rao
I may add to what Nikhilesh, I think it is around six to nine months time. They want to complete all the formalities. According to the what is the bilateral trade agreement has to be implemented from both sides. Both governments have to approve that. I think it will take about six to nine months. That’s what I read in a newspaper the other day.
Nitin Awasthi
Understood, sir. The next question is on the El Nino impact on the weather. One of our core raw materials fish meal will be very heavily impacted by this weather condition. That is for India. And for Ecuador, they have their own challenges with El Nino. So, how are you reading it for both the countries?
C. Ramachandra Rao
Is this question for fish meal? Yeah. See the fish meal as you know, the same, the catches from this ocean it depends upon the nature definitely. Each year it keeps varying. But the last year it was not so good particularly Chile and Peru or the major suppliers of fish meal to the almost global consumers. And this year their catches have been fairly good. And in between there was less demand for Indian fish meal because of the availability of fish meal from Chile and Peru. But again the prices have gone up, again the demand has gone up from the particularly east — the East Asia because particularly from Taiwan and other countries they would like to have a cheaper fish meal available from India.
As far as the quality is concerned, it is the same. That is how the prices in the Indian fish meal is going up. Moreover, the dollar is becoming very strong and rupee depreciation is giving more advantage to the exporters. So, they compare the price in the local price, domestic price with the export price and the government also gives some incentive for that for exports. So, overall the fish meal producers get much more higher margins on exports. So, this is definitely going to be a big challenge for us and we have made representation to the government to bring some sort of a regulatory mechanism by which the exports are limited and adequate fish meal is available for the domestic consumption. But, we’ll have to wait and see because the government is also interested in getting more and more forex. So they would not really agree to that. But we are making our efforts to somehow bring a balance between these two exported fish meal and domestic availability. Let’s wait and see for that.
Nitin Awasthi
Understood, sir. Last question on the core business. The shipping rates and the container movement on our export front, are they stable given the Middle East situation, at least as bad for shipping?
Alluri Nikhilesh
Currently, this war is quite new. So right now we don’t have any changes. Our shipping currently is below like the Cape of Good Hope, Africa. So, we don’t expect so much. But, of course, there should be some disruption. We need to see what happens. For us since most of our markets are to US, Europe, Japan, I don’t think there’s any immediate direct effect, but there’ll be some kind of trickle down effect depending on how containers are blocked or inventory is managed by the shipping company. So, that we need to wait and watch.
Nitin Awasthi
Understood, sir. Moving to the pet food business.
Operator
I’m very sorry to interrupt, Mr. Awasthi, could you please join back in the queue?
Nitin Awasthi
Of course, of course.
Operator
Thank you. Participants are requested to restrict yourselves to two questions in the initial round and join back the queue for more questions. Next question comes from the line of Arjun Khanna from Kotak Mutual Funds. Please go ahead
Arjun Khanna
Sir. Thank you for taking my question. The first query is on the outlook for processing for FY27. So we have given a target of 16,500 for FY26 four quarters. How do we look at FY27 given these trade agreements?
C. Ramachandra Rao
Nikhilesh?
Alluri Nikhilesh
I’ll take that question. So, frankly speaking on a lighter note, you know things — I must thank the Indian government for taking a proactive approach to support the country and the exporters not only for shrimp, but all the categories by unlocking and giving good market access to countries like EU and UK and also negotiating a trade deal with the US eventually, which now doesn’t matter but because of all these reasons of include bilateral trade, we do expect better market access. However, they’re quite robust for the year ’27. But our guidance, I need to relook at it because we’re finalizing some of those numbers with the change in tariff structures.
Arjun Khanna
Sure. So just to understand, we have capacity of around 28,000, would that be the right understanding?
Alluri Nikhilesh
Yes, 28,000 would be the right understanding,
Arjun Khanna
Sure. The second is, given that there is positivity in terms of the shrimp side of it, do you see farmers seeding more going forward, because obviously that impacts both on the feed side and processing side. So, what’s the sentiment at the farmer side?
Alluri Nikhilesh
It’s quite positive. This is not only for the processor or feed mill or farmer, generally everyone in the supply chain is positive. Even the importers are positive because they don’t, you know, it’s just a tax that goes into a government coffer, so we can pass it on to the consumer instead of paying taxes. So definitely everyone is happy about it.
Arjun Khanna
So just to understand this a little further, in terms of — for us on the purchasing side, do you see operating leverage kick in for us as volumes move up or potentially given that we are trying to get entry into newer markets, we would try to price a little bit more competitively?
Alluri Nikhilesh
I wouldn’t say that we would price very competitively because we have better market access. That means we have better demand for our product. But what we need to really see is, how do these things pan out? These are announcements. And so for them to be implemented, like Mr. Rao had said previously, it might take six to nine months or even longer, I don’t even know. It’s difficult to comment on that. But once they start kicking in, I think it’s more of a long-term perspective that I would take an approach not only FY27, that there should be theoretically better margin. But the question that you’re asking is quite new, right. It’s very — tariffs were removed a month ago, so we need to see how this stands out. But theoretically it should give better margin recovery.
Arjun Khanna
So for example, US, where we did bring out that post end Fed tariffs have been revised downwards for us. Are we seeing importers pull in a lot more inventory from India given that now we are a little bit more competitive with Ecuador and some other countries have been hit by higher tariffs in terms of anti dumping CVD, etc.?
Alluri Nikhilesh
So, it’s a very broad question. I’ll just try to make it simple. So, right now we’re in off-season, so there’s not much material at the farm level because it’s winter. But on general level of inquiry level there’s, a higher inquiry level, more positivity, more interactions with the customers on their plans for the year. So, definitely it’s looking positive. But again, we’re in the off-season, so we’re quite confident, I would say that I was quite confident that demand would come back once the season opens.
Arjun Khanna
I’ll get back to the question, but wishing you all the best.
Alluri Nikhilesh
Thank you.
Operator
Thank you. Next question comes from the line of Ronak Shah from Equirus Securities. Please go ahead.
Ronak Shah
Yeah, thanks for the opportunity. So my first question is on the feed business. So, first of all, when the management is guiding for around 5.5 odd lakhs metric tonnes sort of peak sales in FY26, which sounds bit optimistic or like a flattish kind of thing considering the evolving things wherein majority of the things are favoring us in terms of the overall outlook. So, how the company is seeing the business in FY27 and ’28 and can we expect a mid to high single digit sort of growth rate in terms of the overall feed sales volume?
C. Ramachandra Rao
See the growth of volume depends on the circumstances prevailing during the main culture seasons, that is first season and the second season. So, as you know that year after year these climatic conditions keep changing. And last year, we had lot of problems in the climatic conditions. And this year we are hoping that the climate would be more friendly and more suitable for the aquaculture — improved aquaculture. And with this hope and with this confidence, all the farmers have really worked out and making efforts to increase the area of culture this year.
Also those who have left the culture at the time of COVID also have now trying to see that whether they can restart this. So, with these positive developments we are expecting that the growth would be better this year. But this is still a very primitive stage. We have just started the stockings and as we see next couple of months we will know how the culture keeps progressing, depending upon that we would be in a position to estimate the growth that we can expect in the first season. Of course, you know, each season peculiar, unique by itself.
So we know what would be the first year season’s real demand for the feed and also thereafter the second season will start. So, it’s very difficult to exactly estimate. But with all the present circumstances we expect that there should be minimum 10% growth in the feed volume consumption if not more because in this area culture going up and farmers are also very positive about the culture season ahead. So with this we’ll be able to see a growth of about 10%, if not more.
Ronak Shah
Understood, understood. Secondly sir, when we see the gross margin for the feed division, so when we were into the 2Q FY26 conference call, wherein you were highlighting increase in the fish meal and soya meal prices, but when we see the third quarter’s number we can see Q-o-Q improvement into your gross margin. So have we taken some price hike into the feed division and going forward how you are seeing those numbers panning out?
C. Ramachandra Rao
So, what has happened here is, the averaging of the raw material cost has really given that additional advantage in the Q3. So, what is happening is, when the prices keep going up, we follow the weighted average consumption. So the prices — earlier low prices will have some impact on the Q3 raw material prices also, that is how we have got a better improvement than what I said in the last investors call. But again I am saying the same thing now because Q4 is going to be again the same story repeats.
So that is the reason why when we said that the average increase in the profitability is likely to be more about 1% to 1.5% more than what it was there earlier. But if you look at nine months it is very good about 16% we have recorded, but that is not going to be there for the average for the whole year when we are complete by 31st March, 2026. So that would be around 15% — 14.5% to 15% because of the price hike. So, these raw material prices because of the averaging that difference in profitability comes in quarterly results.
Ronak Shah
Understood. So, can we expect around two to three months more, we are having those low cost inventory, which is likely to consume and then after reducing the —
C. Ramachandra Rao
Yes, yes, yes, you are right.
Ronak Shah
Understood. And sir, lastly on the processing business, so we can see a significant improvement into the realization per kg. However, if we see from the EBITDA front, there was some steep increase in your opex into the third quarter. So, can you explain the reason for that and how we are seeing the profitability in these division going forward considering the updates across the Micro?
C. Ramachandra Rao
Nikhilesh, would you like to take this one?
Alluri Nikhilesh
I think my colleague had clearly explained the point, that there was better volume, there was better realization — price realization, better other income. So all these pretty much are the main reasons for the better margin. And on top of that, we were able to pass on the tariffs, which now are being reversed. So that’s the main point of it. We also diversified into other markets, which was good considering the instability volatility in the US market, which was positive in just running the operations continuously. So yeah, I hope that answers, but that the note that my colleague said was actually like on point
Ronak Shah
And just justly on the — your opex front as I was asking that, currently we have around INR190 odd crore sort of opex vis-a-vis you INR77 crore last year. So, what led to this steep jump in current quarter and what can be the sustainable run rate for that?
D.V.S. Satyanarayana
So the major reason for going up the opex was because of the reciprocal tariff, which was the highest at 50% during Q3 FY2026. So that is the reason major jump you can see in opex.
Ronak Shah
Okay, so we are accounting that into our opex part.
D.V.S. Satyanarayana
Yes. Yes.
Ronak Shah
Okay. That’s it for my side. Thank you.
Operator
Thank you. The next question comes from the line of Saurabh Banik [Phonetic] from Divas Consultants. Please go ahead.
Unidentified Participant
Good evening, sir. Am I audible?
C. Ramachandra Rao
Yes, yes, please go ahead.
Unidentified Participant
Congratulations on a mixed set of number. So, I just want to clarify from all of you that in FY27 what are the target markets for all the business segments that we are looking for, is just a plan that you meet if it is met. If you can explain it to us?
C. Ramachandra Rao
See for FY27, we are working on the the projections because till recently we had so many challenges like tariffs and also our own culture season, how it’s going to be and what efforts should we make to encourage the farmers to undertake more cultural. And all this planning was going on. So, we are in the process of preparing for the ’26-’27. I think we’d be able to share with you sometime — in the next call, we should be able to give you more details on that.
Unidentified Participant
Okay, thank you so much for the clarification. And sir, one more question regarding this. In Africa and West Asia, and overall Asia you are also taking a few market share and operating as well. So, how much expectations of that sales realizations that you expect from you know, this Asia and Africa as well? So if you please share this at least.
C. Ramachandra Rao
Nikhilesh, is it — is it got to —
Alluri Nikhilesh
Can you repeat that question?
Unidentified Participant
Yes sir. What do you say, sir?
Alluri Nikhilesh
Can you repeat? Can you repeat?
Unidentified Participant
Okay, so in FY27 as I said, so your plans and projections are on. I just want to know that in Africa and in Asia, are there any opportunities to grow your markets for all the business segments that we are operating?
Alluri Nikhilesh
So Africa generally it’s in terms of income level quite low. So the opportunity in Africa may be not immediate, but more long-term. So, evidence in the immediate next two, three years. Asia in particular has been doing quite well. If you see our share in Asian markets has been blowing over the past few years. So, we’re still very bullish on the Asian market. So, we do expect higher sales towards this region.
C. Ramachandra Rao
We are making efforts to go to the Middle East and we are trying to enter that market. We have — some trials are going on and their culture there, we are supporting them with the technical advice and also we have spent some trial products also to feed to them. And we are making efforts to supply to these Middle East countries also for the shrimp feed. We’ll have to wait and see.
Unidentified Participant
Okay, so, sir, can you please share your, I mean percentage. How much — how far are you — I mean your trials and is it 50%, 60% or 70% completion if you just share the number? I mean how much —
K. Srinivas Reddy
Can you come back on it, what —
Alluri Nikhilesh
We can’t use this as a percentage, right? Because this is like — it’s like a trial. So you cannot give like —
Unidentified Participant
Okay. sir. Got your answers. Lastly sir, one question on financial numbers. So, is there any expectations of yours or calculations that how much numbers on top line and bottom line you will end this year, I mean FY26?
C. Ramachandra Rao
No, not, not now. We are still working on that.
Alluri Nikhilesh
After 30 days we will close the quarter. So —
Unidentified Participant
Okay. Okay. Congratulations.
Operator
Thank you. The next question comes from the line of Akhilesh Rawat from Vedanta Vision Private Limited [Phonetic]. Please go ahead.
Unidentified Participant
Hi. So my question is regarding pet food business. I just want to understand like how we are going to penetrate the market? And the market is you know, surrounded by and dominated by some few key players. So could you please shed some light on your plan like in long term how are we going to you know, penetrate the market?
C. Ramachandra Rao
Venkata Sanjeev, can you please take this question?
A. Venkata Sanjeev
Hi. So right now we are concentrating mostly on the product itself. The product has gotten great reply from the market and all the dog owners and the cat owners who have used it are becoming our repeat customers. So the product is going to be the key for it. And also we’re going to soon launch new products, which will compete with the bigger brands with better quality. That’s what has been our goal since the start.
Unidentified Participant
Okay. And sir, if you could please shed light on some revenue figures like our major revenues coming from dog food or cat food?
A. Venkata Sanjeev
So dog food is around, around 60% to 65% and the rest.
Unidentified Participant
And if you could like set some light on some margin — margin guidance, like what kind of margin are we looking from this business in long term?
C. Ramachandra Rao
Would you like to answer this call? I mean Venkata Sanjeev, would you like to answer this question?
A. Venkata Sanjeev
I think it [Indecipherable].
C. Ramachandra Rao
See, the margins, I think it is too premature to talk about the margins at this stage because we have just started and you know the initial years we will have to incur lot of expenditure on the promotion of the product and building the brand image. So, we’ll have to do lot of work on that and more expenditure is incurred to the create the brand image and to various — the market segments also we have to see, and also the regions. See this product is supposed to be a marketed pan-India.
So we are now concentrating on region wise east, west, north, south like that we have divided and we are in the process of recruiting people to, and also to e-commerce also we are penetrating into the market. And to make the product visible, availability is a very important aspect in this kind of business. And simultaneously, we have our own distributors as well as the e-commerce. So, it will take some time for us to develop this — give the numbers and margins, so because the initial expenditure is high and moreover see now we are doing it more of a trading.
The real — the benefit of this comes to the company when we start our own production. Because — as long as you import the product you know the price — how the foreign exchange that the rupee getting depreciated against the dollar and all when we import and distribution and all the expenses are bound to be higher. And when we start our production maybe in next one year or 16, 12, 14, 15 months, so we should be able to start our own production then. Well real benefit of the project would be seen at that time.
So, now it is only the process is only to develop the brand and stabilize the market base. So people should know that Avati’s product is available and which are the flavors that whether it is a dog food or a cat food, and we are focusing mostly on that. and also recruiting people to promote the product. Business promotion is another important thing. These are the two things, which we are doing that expenditure. But at this stage, it is very difficult to make any margins at this point of time.
Unidentified Participant
And last question regarding this only. So sir, as you have said that we are going to start our own production. So, how much capex are we going to do? Or do we have any facility as of now running in which we will do production? So that’s my last question, sir. Thank you.
C. Ramachandra Rao
We have purchased the land. Land development is going on. We are working with our collaborators for preparing the drawings, and also the missionary estimates, civil work, all this work is actively working on that. And we should be able to really give the clear estimate of the total project cost. Maybe next couple of months we should be able to do it and we start working on the drawings, and we, you know, in India we need so many approvals of the government to start the construction itself. So we will start working on that. So once we get the approvals, we’ll start construction and the total estimated cost of the project and profitability, etc., would be able to give you maybe the next one or two quarter results.
Unidentified Participant
Thank you so much, sir. Thank you for taking my question. Thank you. All the very best for upcoming quarters.
C. Ramachandra Rao
Thank you. Thank you.
Operator
Thank you. [Operator Instructions] Next, we have a follow-up question from Nitin Awasthi from InCred Capital. Please go ahead.
Nitin Awasthi
Thank you for the opportunity for follow-up questions. This is the questions — two questions on the pet food business. Number one, our products were on display and available for purchase on supertails last quarter. We aim to expand it to Amazon. We mentioned expanding it to Amazon this quarter, but however, it still not visible on the portal?
C. Ramachandra Rao
Ventaka Sanjeev, can you take this question?
A. Venkata Sanjeev
Amazon since there’s another brand called Avant, which sells shoes and they’ve been there for a longer time, tThey’ve been visible on the top. But we’re working with Amazon to get our brand on top of the page.
Nitin Awasthi
Understood. Understood. And on follow-up on that. Amazon Pet Foods, if you go on that page, they have started their own brand, which is a tough call given that any other online supplier that you use could also start their own brand. You guys have given any thought to that, whether this will be successful or not successful or as a threat? Do you see it as a threat because they were distributor having its own brand?
A. Venkata Sanjeev
Understood sir. Thank you.
Nitin Awasthi
Amazon — on Amazon pet food page, where all the other brands are displayed and you are aiming for your own brand to be displayed, has started its own pet food brand, and it’s also being upfront about it, you know, in the labeling and marketing and the packaging saying, it’s an Amazon brand. Given that significant amount of pet food is being bought by online distributors, do you see this as a threat going forward, even at Supertails, I think your brands are at display and all throughout the last five months they have been increasing. More and more products have been showing on Supertails. I’m also hearing good feedback from people. But do you see this as a threat that the distributor website itself can start its own brand?
Alluri Nikhilesh
Yes, we do see it as a threat that distributor can start his own page. But he won’t be able to give the same discounts as the companies being able to get. And I think that’s going to affect their business more than ours?
Nitin Awasthi
Understood, sir. Thank you.
Operator
Thank you. We have the next question from the line of Karan Sharma from Prudent Capital [Phonetic]. Please go ahead.
Unidentified Participant
Am I audible?
Shanti Latha
No, you are not.
Operator
Can you speak a bit louder, please?
Unidentified Participant
Am I audible now? Hello, is this better?
Operator
Better.
Unidentified Participant
Yeah, Nikhilesh, my question was to you. So in the shrimp processing division, we have seen in last nien months decent volume growth. So, what I was asking was that, since this chaos of the last one year where duties were changed, do you see any possibility of gaining reasonable market share? Considering your market share volume wise in the last four, five years has been quite stagnant in this division around the 1%, 2% mark. So, considering this is a very fragmented market as you guys had mentioned earlier, with these recent changes in the last 12, 15 months, do you think there is a possibility of gaining decent market share?
Alluri Nikhilesh
Market share in the country? That’s what you —
Unidentified Participant
In terms of global market? Yeah, in terms of, in terms of the players in the country, yeah correct.
Alluri Nikhilesh
So historically, this has been — especially in India, it’s been very fragmented like hundred plus packers. So that way it’s just because of the size of the country, the people on the west coast, east coast, different areas, different people specialize. Some people trying to move only commodity we try to do more value-added. So, that said like if you just look at in a broad perspective, then about — when we form the JV with for the processing division, we were I think below — we’re not even top 10 importers, now find the rank and amongst the top importers for frozen shrimp today.
So, that way we have been increasing our volume, but also we’re also looking to play where there’s better margin by doing more value-added products and trying to work with more premium clients, where the expectations are very demanding generally. So that’s that, but in the next few years from FY27 onwards our main target is to scale, continue to scale. If you see our CAGR percent on volume or revenue, every year they continue to grow the business step by step, and with food processing that’s the way to do it.
Because when a consumer gets the bag of shrimp they find any problems, they raise complaints, right. So and food safety issue itself is very sensitive. So every year we’re going to increase step by step, step by step, that we’re quite confident and that’s obviously we’ve showed the business at least in the last 10 years.
Unidentified Participant
Thank you.
Operator
Thank you. Thank you, sir. There are no further questions. Now, I hand over the floor Mr. C Ramachandra Rao for closing comments.
C. Ramachandra Rao
Thank you for all the investors for actively participating and sharing your views on the performance of the company, the quarter, and also nine months ended, 31st December ’25. And I conclude this conference call with a note that the next call will be able to really see the year-end results as well as the future planning of the company. Thank you for your time. Thank you very much.
Operator
[Operator Closing Remarks].