Avanti Feeds trades higher for sixth straight day, hits 52-week high

Shares of Avanti Feeds were trading higher for the sixth straight day on Thursday on the back of heavy volumes. The stock was up 6 per cent at Rs 581, hitting 52-week high on the BSE. Shares of the company, which engaged in shrimp processing and manufacturing of prawn and fish feeds, surpassed their previous high of Rs 571 touched on November 11, 2019.

In the past six trading days, the share price of Avanti Feeds has appreciated 18 per cent against 3 per cent rise in the S&P BSE Sensex. In the past two months, it has zoomed 42 per cent after reporting healthy set of numbers for the quarter ended September 2019 (Q2FY20). In comparison, the benchmark index has gained 6 per cent during the same period.

The trading volumes on the counter jumped more than three-fold with a combined 1.83 million shares, representing 1.3 per cent of total equity of Avanti Feeds, changing hands on the NSE and BSE till 11:31 am.

Avanti Feeds had reported consolidated sales at Rs 1,064 crore, up 41.1 per cent year-on-year (YoY) on account of 51 per cent growth in Avanti’s shrimp feed business and 15 per cent sales growth in shrimps processing business.

EBITDA (earnings before interest, tax, depreciation and amortisation) grew 79 per cent YoY to Rs 129 crore with the margin expansion of 260 bps YoY at 12.1 per cent. This was mainly due to the expansion in operating margin of the feeds business. The consolidated net profit more-than-doubled to Rs 127 crore from Rs 55 crore in the year-ago quarter. The company has taken benefit of corporate tax rate cut.

“In Q2FY20, the average shrimp prices (Mexican Shrimp -30 count) in the international markets reached USD 13.1/kg (up 10 per cent YoY) that resulted in the domestic farm gate prices at elevated level of Rs 430-450/kg, benefiting the sector,” analysts at Edelweiss Broking said in a result update.

The brokerage firm believes that worst is over for the company and the status quo must be maintained in the coming quarters as processing business has started seeing traction with improvement in utilisation. However, the stock was trading above its 12-month target price of Rs 480 per share.