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Sometime back, we had shared a detailed note on Shrimps industry and had mentioned that the industry is likely to make a comeback after a lull of 2-3 years. You can read it by clicking HERE
We have been looking at this industry because there are some listed companies like - Avanti Feeds, APEX Frozen Foods, etc.
However, it seems that it may take a while before the industry is able to resume its growth trajectory. Below, we have shared the industry outlook as shared by the management of Avanti Feeds.
Before that, some time back, we released our New Stock Recommendation for Alpha and Alpha + Members
It's a food processing company, virtually debt free, compounded profits at 20% + consistently, maintained returned ratios like ROE and ROCE at 20% +, doubled its market share in exports in its segment in the last 6-7 years and yet available at less than 7 times Pre-tax earnings.
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Shrimps industry outlook (notes from Avanti Feeds concall)
At the start of year 2022 the environment for shrimp culture in the country started favorably and the shrimp culture commenced promisingly.
However due to floods, diseases, decrease in farm gate prices and sluggish export market during end of 1st and main crop, shrimp culture did not register expected growth.
This sluggish shrimp culture activity is likely to continue even in the second crop due to decrease in demand for shrimps from USA, Europe and lock-down in China.
In addition, Ecuador is now the biggest shrimp producer, a key export competitor, and is able to ship shrimps at lower rates due to the proximity to the US market.
Moreover, in this kind of situation, some of the farmers are planning to go for a crop holiday till April’23.
Shrimp feed - Though, at the start of the season, the shrimp feed consumption in CY22 in India was expected to grow by about 15% compared to CY21, with an estimated sales of 12 lakh MTs.
However, due to the various reasons stated earlier the shrimp feed consumption in CY22 is now expected to be at 9.75 – 10 lakh MTs, as compared to 11 lakh MTs in CY21.
Shrimp processing and export - The country’s shrimp production and export is likely to come down in CY22 to about 6.50 – 7 lakh MTs, as compared to 8.50 lakh MTs in CY21.
Overall, as per the management of Avanti Feeds, the Indian Shrimp Culture industry is facing unprecedented crisis due to steep fall in exports due to recession in US, Europe and lock down in China coupled with severe competition in export price from Ecuador.
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