Avanti Feeds Ltd Q3 FY22 Earnings Conference Call Insights

Key highlights from Avanti Feeds Ltd (AVANTIFEED) Q3 FY22 Earnings Concall

Management Update:

• As the demand for shrimp feed is expected to increase, the company is in the process of expanding the shrimp feed capacity by setting up a new plant with an annual installed capacity of 1,75,000 metric tons with an estimated capex of INR125 crores. This is expected to commence commercial production by June 2022.

• In Shrimp processing and export, the company expects to invest INR81.32 crores towards capex by setting up preprocessing new units with an estimated capacity of 7,000 metric tons per annum.

Q&A Highlights:

• Depesh Kashyap from Equirus asked if the company will be able to take the price hike in the coming months, given the current price of soya meal, the fish meal, farm gate and international shrimp prices. Alluri Nikhilesh, ED said that the company would be able to take the price hike because the shrimp prices are high. And also, the raw material prices are rising and AVANTIFEED is looking into it.

• Depesh Kashyap from Equirus also asked by when the company is expecting to increase the price. Alluri Nikhilesh, ED replied it would happen by this month end or first week of March.

• Depesh Kashyap from Equirus also enquired how the inventory levels are there in the US. Alluri Nikhilesh, ED answered that inventory levels in US, by end of December, the Christmas and New Year season, the consumption was good and demand is there.

• Yogansh Jeswani from Mittal Analytics asked about the salary hike that management is seeking. Santhi Latha GM, said the company’s whole time Director’s remuneration is a combination of fixed portion and a percentage of profits, which is within the overall limit of the Company’s Act. Now the Company’s Act is allowing to take more percentage. So that is why the company is going for an increase.

• Aman Madrecha from Augmenta Research asked about the demand scenario. Alluri Nikhilesh ED said the demand for seafood is going up and the culture is going up. Therefore the company is expanding and expects sales to go up.

• Nitin Awasthi of InCred Equities asked about the expansion plans on the fish feed segment and when concrete results or concrete plans can be expected. Alluri Nikhilesh ED replied that the company is working seriously on that and the process is on. And on the timeline, the company added that it may take another 6 months to 1 year.

• Akhil Hazari with RoboCapital asked about the revenue guidance for FY23 and FY24 and margin targets. Alluri Nikhilesh ED said the company is targeting 10-12% EBITDA margins. On the revenue side, the company expects to grow it by another 15%.