Monday, October 24, 2011

Avanti Feeds - already up 3.5x Multibagger since Buy Call given last year

Avanti Feeds - India Marine Products leading exporter  / Shrimp feed / Processing- already up 3.5x  Multibagger since Buy Call given last year in Oct 2010 at price 32. ( given reco. mentioned at the end)
Cmp 110.+5% Market cap - 88 crores.  ( Cmp - current market price | 1 Crore = 10 Million )
I would rate it among my top 10 Investment buys with holding period of ~ 1 year with Target - 200 or 2x upside from here
At 200 target, Avanti Feeds would trade at a lifetime / all time high and PE of ~7x,Price to Sales of ~ 0.4x , EV/ EBITDA of ~ 5x
Record Sep 2011 Q2 FY 12  results : -
  • Sales up 2x YoY to 119 crores
  • EBITDA Margins 16.8% vs 6.1%
  • PAT Profit After Tax up 6x to 14 crores
Half yearly Results H1 Sep 2011 vs H1 Sep 2010
  • Sales up 2.2x YoY to 238 crores
  • EBITDA Margins 12.1% vs 4.4%
  • PAT Profit After Tax up 12.5x to 20 crores
Thus on H1 FY 12 Annualized basis , Avanti Feeds is trading at EV/EBITDA of 2.29x , PE of 3x and Price to Sales of 0.22. ROE would jump from 5% last year to 35% plus. This definitely warrants a re-rating. And the stock is justifiably at lifetime highs already. In past 3 months ( since July 2011) , Avanti Feeds has rallied 3x. From its low of 15 of Mar 2009, its already up 7x. Chart here
Early signs of turnaround was already visible. Such as this macro news and the more recent macro events in the world biggest seafood exporters - Japan ( Tsunami and Nuclear leak) , recent floods in Thailand.
Avanti Feeds net profit rises 524.23% in the September 2011 quarter
Sales rise 105.04% to Rs 119.29 crore
Net profit of Avanti Feeds rose 524.23% to Rs 14.17 crore in the quarter ended September 2011 as against Rs 2.27 crore during the previous quarter ended September 2010. Sales rose 105.04% to Rs 119.29 crore in the quarter ended September 2011 as against Rs 58.18 crore during the previous quarter ended September 2010.
ParticularsQuarter Ended
Sep. 2011Sep. 2010% Var.
Sales119.2958.18 105
OPM %16.776.10 175
PBDT20.923.08 579
PBT20.002.31 766
NP14.172.27 524
Previous results here  

Disclosure - No personal positions as of now. But had recommended earlier. Might add in future.

Buy Recommendation given in Oct 2010 ( last year). Target already hit. But would make sense to upgrade the target to at least 200 now.

from  Saanpaurseedi 

date  Thu, Oct 21, 2010 at 9:30 PM
subject  Avanti feeds - seafood market leader turnaround play
Stock is AVANTI FEEDS - results on saturday -23rd leader in seafood exports such as prawns,shrimps,fish.  has potential to give easy 2x-3x atleast if its shows turnaround and reverts to its earlier OPM of 9-10% from current 4%.
  • recently launched domestic focused operations. Ready to cook prawns and also forward integration into eateries .
  • cmp 32. market cap 25 crs. Net current Assets of 40 crs. Debt reduced from peak of 55 crs to 30 crs. i.e at net cost of 15 crores you are getting a 100 crore revenue firm and 4 cr EBITDA and CFO ( past year). 
  • In peak results in FY06 it posted sales of 150 crs and PAT of 8 crores.
  • Q1 sales was 48 crs with OPM of 4%. so no proof yet on turnaround. but have to get in bit early as once it becomes public , will be difficult to get it.
  • main issue on why it has underperformed since past 5 years is it was dependent on US exports and US banned imports from india on account of quality issues ( antibiotics in shrimps) and also later put import duties of 20% on Indian imports. it favoured chinese and thai exporters.
  • another big trigger is worlds largest seafood co. Thai Union has picked up 15% stake 2 years ago.

No comments: