Viraj Mehta presented his in-depth investment thesis on Avanti Feeds Limited (NSE: AVANTIFEED) at Asian Investing Summit 2017.
Avanti Feeds Limited is India’s largest manufacturer of prawn and shrimp feeds, shrimp processor, and shrimp exporter. Avanti has established a joint venture with Thai Union Frozen Products (BKK: TU), the world’s largest seafood processor and leading manufacturer of prawn and fish feeds in Thailand, with integrated facilities from hatcheries to shrimp and fish processing. Avanti has three feed manufacturing facilities. The main activities are manufacturing of shrimp feed, processing, and export of shrimp. India is a leader in shrimp supply to the U.S. Avanti has strong brand name in the industry and 40+% market share in the shrimp feed market (improved from ~20% over five years). Avanti commands a price premium of ~5% over other products in the market.
Strong management execution over the last five years has resulted in revenue growth of ~58% over the last five years, with improving profitability (~11% EBITDA margin) and ROE of ~50%. Avanti accounts for more than 60% of industry profits. The company has $40+ million of net cash after distributing ~$10 million in cumulative dividends over the last five years. The company also passes Viraj’s test of management having “skin in the game”. The earnings multiple is 17x for a business that could grow earnings at a CAGR of 25% over the next three years.
About the instructor:
Viraj has over eight years of experience in the field of investing with an excellent and proven track record. He was selected by Wall Street Journal (WSJ) as part of “Asia’s Master Stock Picker” series for India. Viraj had been a part of fund management team at Franklin Templeton Investments managing an AUM of ~US$ 6bn. Viraj was the lead analyst for managing the small companies fund at Franklin Templeton Investments. Prior to joining equirus, Viraj was part of the team at ValueQuest Capital LLP. He is a MBA from MDI, Gurgaon & Chemical Engineering from Nirma Institute of Technology, Ahmedabad.
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