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Avanti Feeds
Q3FY26 FMCG March 03, 2026
Management Sentiment
7.0/10
Tailwinds
8.0/10
Headwinds
6.0/10
Business Performance Highlights
Executive Summary

Avanti Feeds reported mixed Q3 FY26 results with consolidated PBT up 20.65% YoY to ₹222 crores, driven by strong shrimp processing performance (52% revenue growth in 9M) and stable feed margins despite raw material inflation. Management is optimistic about FY27 citing positive farmer sentiment, removal of US reciprocal tariffs, upcoming EU/UK trade deals, and reinstatement of 15% import duty on shrimp feed protecting domestic manufacturers.

Financial Performance

Consolidated Q3 FY26 gross income was ₹1,447 crores, down 12.78% QoQ but up 2.99% YoY. Consolidated PBT reached ₹222 crores, up 20.65% YoY despite 2.2% QoQ decline. For 9M FY26, consolidated revenue grew 9.67% to ₹4,761 crores with PBT up 32.7% to ₹698 crores. Feed division standalone revenue declined to ₹993 crores in Q3 (down from ₹1,200 crores in Q2 and ₹1,073 crores in Q3 FY25), with PBT at ₹172 crores. However, 9M feed division PBT improved 23.87% to ₹576 crores on revenue of ₹3,471 crores, achieving 16% PBT margin vs 13.3% prior year. Processing division Q3 revenue was ₹455 crores (up 39% YoY from ₹328 crores) with PBT of ₹52 crores (up from ₹18 crores YoY). Key raw material prices surged: fish meal from ₹98/kg in Q2 to ₹117/kg in Q3 (currently ₹145/kg), and soybean meal from ₹43/kg to ₹43/kg in Q3 (currently ₹56/kg), pressuring feed margins.

Revenue
Q3 FY26 consolidated: ₹1,447 crores; 9M FY26: ₹4,761 crores
Revenue Growth
Q3 YoY: +2.99%; 9M YoY: +9.67%
Net Profit
Q3 FY26 PBT: ₹222 crores; 9M FY26 PBT: ₹698 crores
Profit Growth
Q3 PBT YoY: +20.65%; 9M PBT YoY: +32.7%
EBITDA Margin
Feed division 9M PBT margin: 16%; Expected FY26 PBT margin: 14.5-15%
Management Commentary

Management demonstrated cautious optimism with clear acknowledgment of both opportunities and challenges. They emphasized the transformational impact of tariff changes, stating the US reciprocal tariff removal and EU/UK trade deals provide 'better market access' and increased demand visibility. The tone was particularly positive on aquaculture conditions, noting the first season commenced with 'highly positive expectations' and farmers are 'working out and making efforts to increase the area of culture.' However, management was realistic about raw material inflation, transparently discussing fish meal price increases and their margin impact. The repeated emphasis on 10%+ volume growth expectations, successful government advocacy on import duties, and expanding processing capacity utilization (targeting 28,000 MT capacity vs 16,500 MT guidance) signals confidence in structural growth drivers. The pet food commentary was measured, noting it's 'too premature to talk about margins' and focusing on brand building phase before the manufacturing facility becomes operational in 12-15 months.

Risks & Challenges Discussed

Raw material cost inflation is the primary near-term headwind, with fish meal prices surging from ₹117/kg in Q3 to ₹145/kg currently, and soybean meal climbing from ₹43/kg to ₹56/kg. Strong dollar and export incentives are encouraging Indian fish meal exports, constraining domestic supply despite company representations to government. This raw material pressure is expected to compress feed division PBT margins from 16% in 9M to 14.5-15% for full FY26. Tariff uncertainty remains despite Supreme Court ruling, with the new 10%-15% US surcharge under Section 122 potentially subject to further changes. Weather and disease risks continue to impact aquaculture activity and feed consumption volumes. The processing division faces intense fragmentation with 100+ competitors in India. Pet food business faces competition from established brands and emerging distributor-owned brands (Amazon launching own pet food line). Land development and regulatory approvals for the pet food manufacturing facility face typical Indian bureaucratic delays. Foreign exchange volatility impacts both imported pet food trading margins and export realizations.

Forward Guidance

Revenue Outlook: Feed sales expected at ~5.55 lakh MT for FY26 vs 4.38 lakh MT in 9M; Processing exports guided at ~16,500 MT for FY26 vs 14,149 MT in FY25; Minimum 10% feed volume growth expected in FY27

Margin Outlook: Feed division PBT margin expected at 14.5-15% for FY26 (down from 16% in 9M) due to raw material inflation; Processing margins expected to improve with better market access and operating leverage

Key Targets:

Key Takeaways from the Call
What Went Well
  • US reciprocal tariffs effectively eliminated (from 50% total to 10-15%), significantly improving export economics and customer demand inquiry levels
  • Union Budget reinstated 15% duty on imported shrimp feed, addressing key competitive threat that management had lobbied government about
  • Processing division achieving 52% revenue growth and 91% PBT growth in 9M with strong operating leverage as volumes scale toward 28,000 MT capacity
  • First aquaculture season showing 'highly positive expectations' with increased stocking activity and farmers expanding cultivation area
  • Management confident in 'minimum 10%' feed volume growth for FY27 despite historical volatility, citing structural improvements
  • Asian export markets consistently growing, providing diversification from US concentration risk
Areas of Concern
  • Fish meal prices surged 48% from Q2 (₹98/kg to current ₹145/kg) with strong export demand limiting domestic availability despite government representations
  • Soybean meal prices up 30% (₹43/kg to ₹56/kg currently), compressing feed margins from 16% in 9M to expected 14.5-15% for FY26
  • Q3 feed volumes declined 24% QoQ to 1.18 lakh MT (seasonal but steep decline) highlighting sensitivity to weather and farming cycles
  • Tariff uncertainty persists with new 10-15% US surcharge under different legal authority, and Supreme Court ruling doesn't address refunds on previous duties paid
  • Pet food business still in loss-making brand building phase with margins not expected until manufacturing facility operational in 12-15 months; facing competition from Amazon's own pet food brand
  • Processing division OPEX jumped to ₹191 crores vs ₹77 crores prior year primarily due to tariff absorption, showing vulnerability to policy changes
Analyst Q&A Highlights
Q: How do EU/UK trade deals impact market size and when will implementation occur?
A: "Management confirmed these deals will improve market access and demand as duties reduce from 26% (EU) and 9% (UK). However, implementation timeline is 6-9 months as both governments must approve bilateral agreements. No official implementation date yet."
Q: Impact of weather conditions on fish meal availability from India and Ecuador?
A: "Management explained Chile/Peru catches improved this year, but Indian fish meal exports increased due to strong dollar, rupee depreciation, and export incentives. This constrains domestic supply despite company lobbying government for export restrictions. Government prioritizes forex earnings."
Q: Feed division outlook for FY27-28 and expected volume growth?
A: "Management guided for 'minimum 10% growth if not more' based on positive farmer sentiment, increased cultivation area, and farmers restarting post-COVID. Emphasized growth depends on climate conditions during first and second seasons, which remain unpredictable."
Q: Processing division margin outlook with improved tariff environment?
A: "Executive Director Nikilesh indicated 'theoretically better margins' long-term but noted it's 'quite new' (tariff changes only a month old) and need to see implementation. Currently in off-season with limited farm production, but inquiry levels and customer engagement are 'positive.'"
Q: Pet food business margin guidance and competitive threats from Amazon's own brand?
A: "Management stated it's 'too premature' for margin guidance as business focuses on brand building with high promotional expenses. Real benefits come when manufacturing starts (12-15 months). On Amazon competition, acknowledged distributor brands as threat but noted they can't match company discounts and product quality focus."
Call Summary

The Q&A session revealed analyst focus on three key areas: (1) tariff changes and export market dynamics, (2) raw material inflation impact on margins, and (3) pet food business trajectory. Analysts were particularly interested in quantifying the EU/UK trade deal benefits and understanding processing division margin expansion potential. Management responses were measured and realistic—acknowledging strong tailwinds from tariff reductions and trade deals while being transparent about raw material cost pressures. There was notable concern about fish meal availability and pricing, with management candidly discussing the export incentive dynamics limiting domestic supply. On pet food, analysts probed profitability and competitive positioning against established players and Amazon's entry, with management appropriately tempering expectations until manufacturing begins. The processing division discussion highlighted management's confidence in scaling operations toward full capacity utilization (28,000 MT) as trade environment stabilizes. Overall, management struck a balanced tone—optimistic on structural drivers (tariffs, trade deals, farmer sentiment) while acknowledging near-term margin pressure and execution risks. The repeated emphasis on 'wait and watch' for tariff implementation and raw material stabilization suggests management is being appropriately cautious despite clear positive catalysts.

IMPORTANT:
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