ICICI Securities initiated coverage on Avanti Feeds for the first time with a buy rating and a target price of Rs 1,901. The company is a market leader in shrimp feed and a growing player in shrimp exports.
Avanti benefits from 1) numerous moats such as strong brands, established distribution, multiple manufacturing units and sub-segmentation strategy; and 2) relationship with global sea food major, Thai Union.
ICICI Securities expect India’s shrimp exports (value) to grow in mid-teens and Avanti to be a major beneficiary of this trend. With strong financials, the domestic brokerage firm expects Avanti’s earnings growth to resume in FY20E after a decline in FY19E due to lower margins.
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