Tuesday, September 13, 2011
Most of the industries are moving through cycles.Sometimes the length of a cycle is short lived and sometimes it lasts long. We have seen this in IT,Real estate ,Infrastructure ..etc in recent past.About ten years back aquaculture was a hot industry and many companies from this sector came out with IPO's and listed in stock exchanges.But few years later fortunes of this industry faded and many of the listed companies vanished .Even in a tough time which extends for many years, very few companies managed to survive and ultimately emerge as winners when the entire industry turned around ( Survival of the fittest itself) .I strongly feels Aquaculture/Sea food and allied products is one such industry which is going to start the next up move after a long down trend which lasts more than 5 years.Changing the variety of shrimp , introducing value added products, finding new geographical areas to export ..etc helping to re capture the past glory of Indian Sea food exports.Being investors in stock market , now our options are very limited in this sector.As I mentioned above there were many listed companies in this sector about 10 years back.But now there is only three remains with any operations in this field. Out of these three companies Avanti feeds having integrated facilities and better financials.This Hyderabad based company having facilities to manufacture prawn and fish feed and also in processing and exporting of shrimp.Avanti is jointly promoted and having technical and marketing alliances with worlds largest sea food processing company - Thai Union Frozen Products.TUF holds about 15% of the total equity of the company.Citing the revival in the industry company is now expanding its operations into Gujrat, Maharastra and Goa for white shrimp farming. Being a producer of feed for entire aquaculture sector ,company will enjoy the benefits of the expansion of other aquaculture ventures.For the last quarter ended June Avanti posted a turnover of Rs.113 Cr V/s Rs.49 Cr and a net profit of Rs.5.4 Cr v/s a loss of Rs.68 lac. EPS for the first quarter is Rs.6.7. After a gap of 3 years ,company declared a dividend of 10 % for last FY. Indian promoter is hiking his stake in the past few quarters. MPEDA is projecting very good growth for this sector in the coming years.In addition to this ,sharp depreciation of Indian Rupee will surely help exporting companies to post improved margins . The other two listed companies from this space are Waterbase and Uniroyal marine exports. Considering the nature of operations,marketing and technical tie-up,new initiatives,financial position..etc, Avanti is the best among them.This scrip is traded both in NSE and BSE around Rs.68/- .Medium to long term investors may consider @ CMP or lower level.