Navratan SIP on Zee Business: Buy Avanti Feeds Limited Share - Check price target
Navratan SIP on Zee Business: According to the Zee Business analyst, this is a very good time to invest in companies related to shrimp and shrimp feeds as there has been a tremendous increase in demand from both the United States and China of late.
Navratan SIP on Zee Business: In today's edition of Navratna SIP on the occasion of Navratri, Zee Business research analyst Ashish Chaturvedi recommended Avanti Feeds Limited (NSE: AVANTIFEED) for investment. Avanti Feeds is one of India's largest seafood companies and clearly a leader in the shrimp feed segment with a market share of over 45%.
According to the Zee Business analyst, this is a very good time to invest in companies related to shrimp and shrimp feeds as there has been a tremendous increase in demand from both the United States and China of late.
"Currently, the price of shrimp in the international market is around $9 per kg. At the same time, there has been a consistent downfall in the prices of raw materials for shrimps. For example, soya meal is a major raw material for making shrimp feeds and the prices of soya meal have fallen around 30% year-on-year basis. Several experts are of the view that EBITDA (Earnings before interest, taxes, depreciation, and amortization) per kg of the shrimp segment can go above Rs 8," Chaturvedi said.
Interestingly, the company recently completed its expansion plan worth Rs 150 crore and this will help the company to increase its capacity by at least 30%.
The fundamentals of the company are very strong as it has registered good growth in its business and despite so many expansions, Avanti Feeds is completely debt free.
Institutional investors have a strong belief in this company as Foreign Institutional Investors ( FIIs) have over 14% of holdings in Avanti Feeds and Domestic Institutional Investors (DIIs) have over 8.7% of holdings.
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Talking about the strong demand for shrimp feeds, Zee Business Managing Editor Anil Singhvi said that Avanti Feeds is going to get double the benefits of a rise in demand and fall in Rupee as they are mainly in the export business.
"The Indian Rupee has fallen to around Rs 81.50, so the margin of benefit will definitely increase," Singhvi said.
Singhvi also said that the company has a good valuation as it has a market cap of around Rs 6,500 crores and has cash of around Rs 1,000.
"The company is debt free, there is cash flow and all other things are in favour of the company so there are very little chances of things going wrong in this case," he added.
Avanti Feeds Ltd Share Price Target - Rs 600 (for short term)
In the long term, investors can set the target of Rs 675 and Rs 775.
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