Equirus Securities has a 12-month target of Rs 520 on Avanti Feeds as well as Apex Frozen with an investment horizon of 1 year
Avanti Feeds and Apex Frozen—two prominent names in the aquaculture—fell 43 percent and 47 percent, respectively, in the last one year. Avanti Feeds slipped from Rs 721 to Rs 408 and Apex Frozen Food plunged from Rs 621 to Rs 324 in the last 12 months.
But, this may be the end of bad days for the stocks as Equirus Securities in a report said India’s shrimp exports continue to gain momentum and that could benefit Avanti Feeds and Apex Frozen Food.
The brokerage house has a target of Rs 520 on Avanti Feeds as well as Apex Frozen with an investment horizon of one year.
The brokerage expects the earning per share of both companies to decline in FY19 and then rise in FY20.
Equirus expects Avanti Feeds' EPS to tank 35.7 percent in the current fiscal year. Similarly, Apex Frozen's EPS is expected to fall by 17 percent.
However, the EPS is expected to see a surge in FY20. According to the report, Apex Frozen will see a massive 66 percent YoY rise and Avanti Feeds will see a jump of 24 percent in their respective EPS.
The weakness in EPS for FY19 corresponds to the trend in shrimp export from India. The shrimp export volumes grew 7 percent year-on-year (YoY) in January 2019. However, in terms of value, exports declined 6 percent YoY in the month compared to a 12 percent fall in December.
“We have highlighted earlier that after strong volume growth of 32 percent in CY17, Indian shrimp exports decelerated to over 8 percent YoY in CY18. This was mainly due to a weaker second crop that led exports to decline 3 percent YoY in H2CY18,” the report said.
However, shrimp exports started recovering in December 2018 and the surge continued in January 2019 as well, the report said. The US continued to be the preferred destination as two-fifths of all exports went to Washington, compared to barely above one-third of the total export in January 2018.
China also contributed to the rise in shrimp export from India. Its share in the export catapulted to 17 percent in January 2019, compared to 3 percent last year.
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