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Avanti Feeds Limited Q1 FY25 Earnings Conference Call Summary
Conference Call Details • Date: August 9, 2024 • Submission Date: August 14, 2024 • Participants: Dr. A. Indra Kumar (Chairman and Managing Director), C. Ramachandra Rao (Joint Managing Director)
Financial Performance • Consolidated Gross Income: • Q1 FY25: INR 1,541 crores • Increase: 16.7% from Q4 FY24 • Decrease: 2.84% from Q1 FY24 • Profit Before Tax (PBT): • Q1 FY25: INR 180 crores • Increase: 19.2% from Q4 FY24, 14.64% from Q1 FY24 • Feed Division: • Gross Income: INR 1,298 crores (up 27% from Q4 FY24, down 4% from Q1 FY24) • PBT: Increased by 29.67% from previous quarter
Challenges and Outlook • Sector Challenges: • Natural calamities and fluctuating raw material prices affecting shrimp culture and feed consumption. • Future Expectations: • Anticipation of stable farm gate prices and improved conditions for FY25. • Insights into record seafood export performance in FY24.
Shrimp Processing and Export Division • Gross Income: • Q1 FY25: INR 243 crores (down from INR 297 crores in Q4 FY24) • Year-on-Year: Slight increase of 2% compared to Q1 FY24 • Profit Before Tax: • Decreased to INR 27 crores due to CVD on US imports and rising ocean freight rates.
Market and Industry Insights • Global Shrimp Market Growth: • Projected CAGR of 5.5% from 2024 to 2031. • Government Support: • Measures to boost productivity and support the industry despite a decline in Indian shrimp export value in 2023. • CVD Concerns: • Final determination expected in October 2024.
Diversification Initiatives • Joint Venture: • Avanti Petcare Private Limited with Bluefalo Company Limited in Thailand for pet food products. • Manufacturing Facility: • 30 acres acquired, trading expected to start by March 31, 2025.
Fish Feed Plans • Import Plans: • Feed from Thai Union Feed Mill Company with trials in India before local production. • Challenges: • Adverse weather and disease outbreaks affecting feed volumes.
Management Insights • Sales vs. Production: • Increased production but sales not keeping pace due to stock in transit and container shortages. • Raw Material Prices: • Fluctuations impacting margins and future cost predictions. • Investment Plans: • INR 130-150 crores in new pet food venture, launching by March 2024.
Conclusion • Management expressed gratitude to investors, emphasizing commitment to transparency and communication.
Earnings Overview • Date of Call: June 4, 2024 • Key Executives: C. Ramachandra Rao (Joint Managing Director) and financial leaders • Q4 FY24 Performance: • Gross Income: INR 1,320 crores (up 2.5% QoQ, 18.2% YoY) • Profit Before Tax (PBT): INR 151 crores (30% increase from Q3 FY24) • Full Fiscal Year Performance: • Total Income: INR 5,505 crores • PBT: INR 537 crores (due to higher revenue and lower raw material costs)
Standalone Feed Division • Q4 FY24 Results: • Gross Income: INR 1,022 crores (16.8% increase YoY) • PBT: INR 119 crores (56% increase YoY) • Raw Material Costs: Fluctuations noted, particularly in fish meal.
Shrimp Processing and Export Division • Export Performance: • FY24 Exports: 13,443 metric tons (up from 12,497 metric tons in FY23) • Q4 FY24 Results: • Gross Income: INR 297 crores (10% decline QoQ, 21% increase YoY) • PBT: INR 32 crores (decrease from previous quarters) • Fiscal Year Results: • Gross Income: INR 1,117 crores (increase from FY23) • PBT: INR 136 crores (slight decrease from FY23)
New Shrimp Processing Plant • Location: Krishnapuram • Operational Date: March 21, 2024 • Capacity: 7,000 metric tons per annum • Government Incentives: Eligible for grants under Production Linked Incentive and Operation Green schemes.
Industry Outlook and Challenges • Aquaculture Industry: Cautiously optimistic despite challenges (climatic conditions, disease). • Plans: Increase feed sales and shrimp exports, especially with the new plant. • U.S. Duties: Countervailing duty on shrimp exports being contested.
Financial Strategies and Market Position • EBITDA Margins: Discussion on enhancing margins amid fluctuating raw material costs. • Cash Flow: Decline attributed to increased working capital needs. • Domestic Market Entry: Emphasis on cash sales to mitigate credit risks.
Joint Venture and Pet Food Division • Ownership Structure: 51% Avanti Feeds, 17% promoters, 15% Bluefalo, 17% private investors. • Market Conditions: Q1 sales below expectations, with recovery anticipated in Q2 and Q3.
Conclusion • Management Commitment: Focus on growth in processing and pet care divisions, with positive market responses expected.
Earnings Overview • Date of Call: February 14, 2024 • Consolidated Gross Income: INR 1,287 crores (13.7% YoY increase) • Profit Before Tax (PBT): INR 116 crores (21% increase YoY) • Nine-Month Total Income: INR 4,185 crores; PBT at INR 386 crores
Feed Division Performance • Standalone Gross Income: INR 958 crores (9% YoY increase) • PBT for Feed Division: INR 76 crores • Challenges: Seasonal sales volume decreases and fluctuating raw material costs (fish meal, soyabean meal, wheat flour)
Shrimp Feed and Export Trends • Shrimp Feed Sales: 5.13 lakh metric tons (2% decline YoY) • Overall Indian Feed Consumption: 15% decline • Shrimp Exports: Value dropped from $5,234 million (FY22) to $4,008.9 million (FY23) • Processing Division Growth: 30% increase in gross income to INR 329 crores
Future Projections • Anticipated Shrimp Feed Consumption: 10.5-11 lakh metric tons in FY24 • Projected Feed Sales: 6 lakh metric tons • Expected Shrimp Exports: 15,000 metric tons • Diversification Plans: Into pet food and fish feed manufacturing
Strategic Initiatives • New Fish-Feed Manufacturing Facility: Under evaluation • Entry into Domestic Frozen Market: Structured marketing strategy in place • Government Incentives: Eligible for various schemes
Market Challenges and Management Insights • Raw Material Costs: 85% of costs from wheat, fish, and soya • EBITDA Margins: Stagnation due to rising raw material prices and weak US market conditions • Fish Meal Prices: INR 125-127, influenced by supply and demand dynamics
Management Outlook • Cautious Optimism for FY24: Marginal increase in exports and feed consumption expected • Long-Term Growth: Anticipated 5-10% growth in the shrimp industry over the next few years • Focus on Profitability: Maintaining quality while adapting to market conditions and ensuring sustainable pricing for farmers.
Conference Call Details • Date: November 21, 2023 • Discussion of unaudited financial results for Q2 and half-year ended September 30, 2023 • Key executives present, including Joint Managing Director C. Ramachandra Rao
Financial Performance • Q2 FY24 Results: • Gross income: INR 1,312 crores (down 17% from Q1 FY24, 2.6% from Q2 FY23) • Profit Before Tax (PBT): INR 113 crores (down 28% from Q1 FY24, up 24% from Q2 FY23) • Half-Year Results: • Total income: INR 2,898 crores (decrease) • PBT: INR 270 crores (increase due to lower raw material costs)
Division Performance • Feed Division: • Q2 FY24 gross income: INR 1,064 crores (down from Q1 FY24, up 2% from Q2 FY23) • Shrimp Processing Division: • Q2 FY24 gross income: INR 253 crores (up 7% from Q1 FY24, down 19% from Q2 FY23)
Sales and Production Trends • Shrimp feed sales decreased to 4.97 lakh metric tons in FY23 (down from 5.41 lakh metric tons in FY22) • Shrimp exports: 12,497 metric tons in FY23 (down from 12,836 metric tons in FY22)
Future Plans and Expansion • New Frozen Foods processing plant expected to start by March 2024 • Participation in government incentive schemes • Diversification into pet food and fish feed with ongoing market research
Industry Outlook • Expected 4.8% growth in global shrimp production in 2024 • Recovery signs in the U.S. shrimp market
Management Responses • Expansion plans include increasing shrimp processing capacity by 7,000 tons • Preference for using cash reserves for working capital over share buybacks • Concerns about rising raw material prices and government policies affecting profitability
Challenges and Market Dynamics • Government policies favoring exports over local consumption • Potential impact of the India Shrimp Tariff Act in the U.S. • Competitive landscape with Ecuador in shrimp production
Conclusion • No significant delays in expansion projects • Expectation to maintain single-digit debtor days • Call concluded with appreciation for participants and invitation for further inquiries
Avanti Feeds Limited Q1 FY24 Earnings Conference Call Summary
Overview • Date of Call: August 22, 2023 • Transcript Submission: August 28, 2023 • Focus: Unaudited financial results for the quarter ending June 30, 2023
Financial Performance • Gross Income: • Consolidated: INR 1,586 crores (42% increase from previous quarter) • Feed Division: INR 1,351 crores (3% increase from Q1 FY23) • Profit Before Tax (PBT): • Consolidated: INR 157 crores (12% increase from Q4 FY23) • Feed Division: INR 125 crores (17% increase from Q1 FY23) • Shrimp Processing Division: • Gross Income: INR 238 crores (3% decrease from Q4 FY23, 13% year-over-year) • Sales Volume: 2,658 metric tons (down from 3,260 metric tons in Q1 FY23) • PBT: INR 32 crores (slight increase from INR 30 crores in Q1 FY23)
Challenges • Rising raw material costs (fishmeal, soybean meal, wheat flour) affecting production costs. • Shrimp culture industry outlook is bleak with reduced brood stock imports and declining exports.
Future Outlook • Expected revenue decline of 25-30% in the second half of FY24 due to oversupply and reduced prices. • Anticipation of demand recovery during the U.S. holiday season. • Focus on cost reduction, productivity improvement, and increasing exports of value-added products.
New Initiatives • Avanti Pet Care: • Plans for a joint venture in the pet care sector. • Market research and agreements in progress to assess costs and market share.
Raw Material Insights • Variability in raw materials for pet food based on type and market segment. • Challenges with fishmeal prices due to Peru's export restrictions.
Market Strategy • Commitment to the U.S. shrimp market while exploring diversification into other markets. • Emphasis on India's competitive advantage in shrimp exports despite challenges from Ecuador.
Feed Segment Developments • Exploration of fish feed for high-value species with commercialization plans by FY25. • Impact of government price controls on profitability discussed.
Conclusion • Call concluded with appreciation for participation and encouragement for further inquiries.
Avanti Feeds Limited Q4 FY23 Earnings Call Summary
Overview • Date of Call: June 6, 2023 • Focus: Audited financial results for the quarter and year ending March 31, 2023 • Key Personnel: Joint Managing Director C. Ramachandra Rao
Financial Performance • Q4 FY23 Gross Income: • Rs. 1,117 crores (1.3% decrease from Q3, 17% decline YoY) • Profit Before Tax (PBT): • Rs. 140 crores (46% increase from Q3, 16% increase YoY) • Standalone Feed Division: • Gross income: Rs. 875 crores (slight decrease) • PBT: Increased by 53% due to stabilized raw material prices • Shrimp Processing Division: • Gross income: Rs. 245 crores (down 4.3% from Q3, 18% from Q4 FY22)
Challenges and Outlook • Raw Material Costs: • Increased fishmeal prices due to export demand • Management urged government intervention • Shrimp Production Outlook: • Estimated at 8.5 lakh MT for 2023 (down from 9 lakh MT in 2022) • Feed sales decreased to 4.97 lakh MT in FY23
Revenue Expectations • Revenue may remain flat or decline by 10% • Concerns about rising fish meal prices affecting domestic consumers • Upcoming production assessments in Peru and Chile could stabilize prices
Margins and Investments • Projected EBITDA margins: 7-8% based on raw material prices • Cash reserves: Approximately ₹1,000 crores for working capital and future investments
Market Growth Potential • Focus on domestic fish feed market with potential international opportunities • Collaboration with Thai Union for fish feed production • Challenges in Ecuador shrimp market noted
Industry Challenges • Ongoing global recession concerns and market instability • Optimism for FY24-25 with anticipated stabilization • Farmers gradually stocking up as prices stabilize
Additional Discussions • Inquiry about FY24 operating margin; clarity expected after Q3 • Discussion on potential share buyback; current stock price lower than historical levels • Emphasis on need for working capital and expansion investments over buybacks
Conclusion • Acknowledgment of challenges in the current fiscal year but optimism for gradual improvement in the following year.
Earnings Overview • Date of Call: February 22, 2023 • Gross Income: INR 1,132 crores • 16% decrease from previous quarter • 4% increase year-over-year • Profit Before Tax (PBT): INR 96 crores • 7% increase from Q2 FY23 • 45% increase from Q3 FY22
Feed Division Performance • Gross Income: INR 878 crores • Down 16% from Q2 FY23 • Up 7% from Q3 FY22 • PBT: Increased by 35% due to stabilized raw material prices • Challenges: Decreased sales due to disease and raw material price fluctuations
Shrimp Processing Division • Gross Income: INR 256 crores • Down 17.7% from Q2 FY23 • Down 5.2% from Q3 FY22 • Sales Volume: Decreased by 18% due to postponed shipments • PBT: Decreased to INR 30 crores from INR 40 crores in Q2 FY23
Industry Challenges and Outlook • Shrimp Production: Expected around 8.5 lakh MT in 2023 • Budget Support: Limited support for aquaculture; minor import duty reductions • Feed Consumption: Anticipated at 5 lakh MT for FY23
Strategic Focus • Expansion Plans: Increasing production capacities and introducing value-added products • Revenue Growth: Potential 25% increase at full utilization of new feed capacity • Working Capital: High requirements affecting cash utilization for expansions
Market Conditions • Raw Material Prices: Volatility impacting margins; uncertain future trends • Global Influences: Inflation and supply chain disruptions affecting revenue expectations
Value-Added Products • Contribution to Exports: Approximately 25% of total exports • Margin Expectations: Double-digit margins anticipated as pricing pressures stabilize
Financial Management • Cash Reserves: Around INR 1,100 crores allocated for working capital • Seasonal Fund Management: Careful allocation for purchasing seasonal raw materials
Future Opportunities • Research Initiatives: Ongoing research into shrimp species, including pathogen-free varieties • Capacity Utilization: Feed plant at 80%, processing plant at 60-65% focusing on value-added products
Conclusion • The management remains optimistic about the feed processing division despite current challenges, emphasizing strategic expansions and product diversification to enhance revenue and margins.