Buy Avanti Feeds, target Rs 1545: ICICI Securities

ICICI Securities has buy call on Avanti Feeds Ltd. with a target price of Rs 1545. The current market price of Avanti Feeds Ltd. is Rs 612.15 Time period given by the brokerage is a year when Avanti Feeds Ltd. price can reach defined target.

Avanti Feeds Ltd., incorporated in 1993, is a midcap company with a market cap of Rs 10659.18 crore.

Investment rationale by ICICI Securities


We initiate coverage on Avanti Feeds (Avanti), market leader in shrimp feed and a growing player in shrimp exports. Avanti benefits from: 1) numerous moats suchas strong brands, established distribution, multiple manufacturing units and subsegmentation strategy; and 2) relationship with global sea food major, Thai Union.We expect India’s shrimp exports (value) to grow in mid-teens and Avanti to be a major beneficiary of this trend. With strong financials (>35% return ratios andFCF/PAT of 66% over FY13-18), we expect Avanti’s earnings growth to resume in FY20E after a decline in FY19E due to lower margins. We initiate with a BUY ratingand DCF based target price of Rs1,901 (implied target P/E 20x FY20E EPS).