Whilst the year-on-year performance remains encouraging, the quarter revealed notable margin compression and sequential revenue contraction that warrant careful monitoring. Net sales declined 14.01% QoQ to ₹1,383.52 crores, though they remained marginally ahead of the previous year's corresponding quarter by 1.31%.
The quarter's performance presents a mixed narrative: whilst profitability margins expanded both sequentially and year-on-year, the absolute profit decline on a QoQ basis and the sharp revenue contraction signal potential headwinds in the operating environment. The company's stock has delivered exceptional returns over the past year, gaining 64.74% and significantly outperforming the Sensex's 10.41% return during the same period, demonstrating strong investor confidence in the long-term fundamentals.
| Quarter | Net Sales (₹ Cr) | QoQ Change | Cons. Net Profit (₹ Cr) | QoQ Change | PAT Margin |
|---|---|---|---|---|---|
| Dec'25 | 1,383.52 | -14.01% | 149.38 | -2.55% | 11.82% |
| Sep'25 | 1,608.87 | +0.16% | 153.29 | -14.02% | 10.47% |
| Jun'25 | 1,606.36 | +16.22% | 178.29 | +17.47% | 11.56% |
| Mar'25 | 1,382.14 | +1.21% | 151.77 | +12.25% | 11.37% |
| Dec'24 | 1,365.63 | +0.78% | 135.21 | +18.97% | 10.33% |
| Sep'24 | 1,355.09 | -10.04% | 113.65 | -11.34% | 8.96% |
| Jun'24 | 1,506.27 | — | 128.19 | — | 9.13% |
Financial Performance: Margin Resilience Amidst Revenue Volatility
Avanti Feeds' Q3 FY26 financial performance revealed contrasting trends across key metrics. Net sales of ₹1,383.52 crores represented a 14.01% sequential decline from Q2 FY26's ₹1,608.87 crores, though the company managed to edge past the year-ago quarter's ₹1,365.63 crores by 1.31%. This sequential contraction reflects the seasonal nature of the aquaculture business and potential demand moderation in the shrimp feed segment.
The standout feature of the quarter was the margin performance. Operating profit (excluding other income) stood at ₹176.05 crores with a margin of 12.72%, representing a 68 basis points improvement from Q2 FY26's 12.04% and a substantial 97 basis points expansion year-on-year from 11.75%. This margin expansion, achieved despite revenue contraction, points to improved operational efficiency and better cost management.
Net profit after tax reached ₹163.89 crores in Q3 FY26, translating to a PAT margin of 11.82%, up from 10.47% in the previous quarter and 10.33% in the year-ago quarter. This 135 basis points year-on-year margin expansion demonstrates the company's ability to extract better profitability from each rupee of sales. On a consolidated basis, the net profit of ₹149.38 crores showed resilience with a 10.48% year-on-year growth, though it declined 2.55% sequentially.
Employee costs moderated to ₹65.18 crores in Q3 FY26 from ₹70.66 crores in Q2 FY26, contributing to the margin improvement. The company's gross profit margin expanded to 17.23% from 15.09% in the previous quarter, indicating favourable raw material dynamics or improved product mix. Interest costs remained negligible at ₹0.68 crores, reflecting the company's virtually debt-free status, whilst depreciation remained stable at ₹15.92 crores.
The tax rate increased to 26.38% in Q3 FY26 from 25.67% in the previous quarter, marginally impacting the bottom line. Other income contributed ₹63.05 crores, up from ₹49.44 crores in Q2 FY26, providing additional support to profitability. This represents a significant 27.51% sequential increase, suggesting better treasury management or improved returns on surplus funds.
Operational Excellence: Capital Efficiency Remains Exceptional
Avanti Feeds continues to demonstrate exceptional capital efficiency, with its return on capital employed (ROCE) standing at an impressive 260.64% for the latest period and averaging 73.75% over time. This extraordinarily high ROCE underscores the company's ability to generate substantial returns from its capital base, a testament to its asset-light business model and efficient operations in the aquaculture sector.
The company's return on equity (ROE) of 20.55% for the latest period, with a five-year average of 16.10%, places it in the "good" category for profitability metrics. Whilst the ROE is healthy and indicates efficient utilisation of shareholder capital, it trails some FMCG peers like Gillette India (40.86%) and Emami (29.50%). However, Avanti Feeds' ROE remains competitive and reflects consistent value creation for shareholders.
Balance Sheet Strength: Net Cash Company
Avanti Feeds operates with minimal debt, carrying only ₹10.46 crores in long-term debt as of March 2025 against shareholder funds of ₹2,800.96 crores. With a net debt to equity ratio of -0.91, the company is effectively a net cash enterprise. This fortress balance sheet provides significant financial flexibility for growth investments, weather industry downturns, and maintain dividend payouts without financial stress.
The company's current assets of ₹2,991.53 crores comfortably exceed current liabilities of ₹452.93 crores, resulting in a robust current ratio that ensures strong liquidity. Cash and cash equivalents stood at ₹26.00 crores as of March 2025, whilst investments totalled ₹59.93 crores, providing additional financial cushion.
The company's interest coverage ratio averages an exceptional 100 times, reflecting minimal interest burden due to the virtually debt-free capital structure. This provides significant operating leverage and insulates profitability from interest rate fluctuations. Sales to capital employed averaged 2.34 times, indicating efficient asset utilisation, though there remains scope for improvement compared to industry leaders.
Working capital management showed mixed signals. The company reported a positive cash flow from operations of ₹584.00 crores in FY25, up substantially from ₹260.00 crores in FY24, driven by improved working capital management. However, the latest half-year data indicates a debtors turnover ratio at its lowest level of 27.12 times, suggesting either extended credit periods or slower collections, which merits monitoring.
The Growth Trajectory: Steady But Moderating
Avanti Feeds has delivered consistent growth over the long term, with net sales expanding at a compound annual growth rate (CAGR) of 8.08% over the past five years. Annual revenue grew from ₹4,115 crores in FY20 to ₹5,612 crores in FY25, demonstrating the company's ability to scale operations in the competitive aquaculture market. The five-year EBIT growth of 9.59% slightly outpaced sales growth, indicating gradual margin expansion over time.
However, recent growth momentum has moderated. FY25 revenue growth of 4.50% marked a deceleration from the 22.80% surge in FY22, suggesting the company is cycling through tougher comparisons and facing a more challenging operating environment. The nine-month performance for FY26 (April-December 2025) shows net sales of ₹4,598.75 crores, representing healthy growth compared to the corresponding period last year.
Nine-Month Performance Snapshot
For the nine months ended December 2025, Avanti Feeds reported consolidated net profit of ₹480.96 crores, growing 21.48% year-on-year. This strong performance in the first three quarters of FY26 has been driven by margin expansion and operational improvements, even as revenue growth remained modest. The company's ability to enhance profitability whilst managing top-line pressures reflects disciplined execution and favourable industry dynamics.
Looking at the quarterly trajectory, revenue has exhibited volatility, oscillating between ₹1,355 crores and ₹1,609 crores over the past seven quarters. This variability reflects the seasonal nature of shrimp farming cycles, weather-dependent production patterns, and fluctuations in export demand. The company's ability to maintain margin discipline through these cycles has been commendable, with operating margins (excluding other income) consistently above 10% since Q4 FY24.
| Company | P/E (TTM) | P/BV | ROE (%) | Debt/Equity | Div Yield (%) |
|---|---|---|---|---|---|
| Avanti Feeds | 26.28 | 5.40 | 16.10 | -0.91 | 0.75 |
| Godfrey Phillips | 25.68 | 5.71 | 19.54 | -0.15 | 1.74 |
| Gillette India | 45.91 | 24.50 | 40.86 | -0.51 | 3.34 |
| Emami | 27.19 | 7.45 | 29.50 | -0.25 | 2.40 |
| Hatsun Agro | 53.75 | 11.13 | 19.32 | 1.06 | — |
| Bikaji Foods | 67.06 | 11.17 | 17.88 | -0.01 | 0.15 |
Within its FMCG peer group, Avanti Feeds trades at a P/E multiple of 26.28 times, broadly in line with Godfrey Phillips (25.68x) and Emami (27.19x), but at a significant discount to Hatsun Agro (53.75x) and Bikaji Foods (67.06x). The company's price-to-book value of 5.40 times is amongst the lowest in the peer set, suggesting relative valuation attractiveness. However, the lower ROE of 16.10% compared to peers like Gillette India (40.86%) and Emami (29.50%) partially justifies this valuation discount.
The company's debt-free status (net debt to equity of -0.91) stands out favourably compared to peers, with only Gillette India showing a stronger balance sheet position. This financial strength provides Avanti Feeds with strategic flexibility that many competitors lack. The dividend yield of 0.75% is modest compared to Gillette India's 3.34% or Emami's 2.40%, reflecting the company's preference for retaining capital for growth investments rather than aggressive dividend distribution.
Valuation Analysis: Fair Value with Limited Upside
At the current market price of ₹1,193.10, Avanti Feeds trades at a P/E (TTM) of 26.28 times, marginally above the industry average of 25 times. The company's valuation has been graded as "Very Attractive" by proprietary scoring models, having upgraded from "Attractive" in September 2025. This assessment reflects the combination of reasonable multiples, strong balance sheet, and improving operational performance.
The stock's price-to-book value of 5.40 times appears reasonable given the company's ROE of 20.55%, though it represents a premium to the long-term average ROE of 16.10%. The EV/EBITDA multiple of 18.12 times and EV/EBIT of 19.74 times are in line with historical averages, suggesting the stock is neither significantly overvalued nor undervalued at current levels.
The PEG ratio of 0.55 suggests the stock is attractively valued relative to its growth prospects, as a PEG below 1.0 typically indicates undervaluation. With a five-year earnings CAGR of 9.59% and trading at 26 times earnings, the stock appears to offer reasonable value for growth-oriented investors. However, the recent deceleration in revenue growth to 4.50% in FY25 raises questions about whether historical growth rates are sustainable.
The stock has delivered exceptional returns, appreciating 64.74% over the past year and 207.14% over three years, significantly outperforming the Sensex. Trading just 1.23% below its 52-week high of ₹1,208.00 and 105% above its 52-week low of ₹582.00, the stock has clearly been in a strong uptrend. The recent surge of 48.55% over the past month and 62.69% over three months suggests strong momentum, though this also raises concerns about near-term overextension.
| Quarter | Promoter (%) | FII (%) | MF (%) | Insurance (%) | Other DII (%) |
|---|---|---|---|---|---|
| Dec'25 | 43.23 | 7.98 | 3.76 | 0.00 | 3.12 |
| Sep'25 | 43.23 | 6.98 | 3.73 | 0.05 | 3.13 |
| Jun'25 | 43.23 | 7.59 | 3.78 | 0.00 | 2.94 |
| Mar'25 | 43.23 | 6.42 | 4.62 | 0.17 | 3.00 |
| Dec'24 | 43.23 | 14.47 | 4.86 | 0.17 | 3.18 |
Shareholding: Stable Promoter Base, Fluctuating Institutional Interest
Avanti Feeds' shareholding pattern reveals a stable promoter holding of 43.23%, which has remained unchanged over the past five quarters. This consistent promoter stake, with zero pledging, signals strong management confidence and alignment with minority shareholders. The promoter group is led by Srinivasa Cystine Private Limited (26.64%) and Indra Kumar Alluri (6.11%), indicating concentrated family ownership.
Foreign institutional investor (FII) holdings have exhibited notable volatility, declining sharply from 14.47% in December 2024 to 6.42% in March 2025, before gradually recovering to 7.98% in December 2025. This represents a sequential increase of 1.00 percentage points from September 2025, suggesting renewed foreign investor interest. The sharp decline in Q4 FY25 coincided with a period of market volatility and may have reflected profit booking after strong returns.
Mutual fund holdings have remained relatively stable at 3.76% in December 2025, with only minor fluctuations over the past year. The sequential increase of 0.03 percentage points from September 2025 indicates marginal buying by domestic institutional investors. Insurance company holdings have been negligible, dropping to 0.00% in December 2025 from 0.05% in the previous quarter.
Non-institutional holdings, which include retail and high-net-worth individuals, stood at 41.91% in December 2025, down from 42.88% in the previous quarter. The significant jump from 34.09% in December 2024 to 42.57% in March 2025 suggests retail investors absorbed the shares sold by FIIs during that period. Overall institutional holdings of 14.86% remain modest, indicating significant scope for increased institutional participation as the company scales and gains visibility.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | +11.37% | +0.50% | +10.87% |
| 1 Month | +48.55% | +0.79% | +47.76% |
| 3 Months | +62.69% | +0.43% | +62.26% |
| 6 Months | +86.54% | +4.50% | +82.04% |
| Year-to-Date | +43.34% | -1.16% | +44.50% |
| 1 Year | +64.74% | +10.41% | +54.33% |
| 2 Years | +124.71% | +17.65% | +107.06% |
| 3 Years | +207.14% | +38.81% | +168.33% |
Stock Performance: Exceptional Momentum with Elevated Volatility
Avanti Feeds has delivered stellar stock performance across all timeframes, with particularly impressive returns in recent months. The stock surged 48.55% over the past month and 62.69% over three months, significantly outperforming the Sensex's modest gains of 0.79% and 0.43% respectively. This explosive recent performance has generated alpha of 47.76% and 62.26% over these periods, reflecting strong investor enthusiasm.
Over longer timeframes, the outperformance remains substantial. The one-year return of 64.74% compares favourably to the Sensex's 10.41%, generating alpha of 54.33%. The three-year return of 207.14% represents a tripling of shareholder wealth, with alpha of 168.33% versus the benchmark. Even over five years, the stock has delivered returns of 135.98% against the Sensex's 63.46%, demonstrating consistent value creation.
Technical indicators paint a uniformly bullish picture. The stock trades above all key moving averages—5-day (₹1,082.94), 20-day (₹870.05), 50-day (₹847.03), 100-day (₹781.66), and 200-day (₹765.89)—indicating strong momentum across all timeframes. The overall technical trend turned "Bullish" on February 3, 2026, upgrading from "Mildly Bullish," with MACD, Bollinger Bands, Dow Theory, and On-Balance Volume all flashing bullish signals.
High Volatility Warning
Investors should note that Avanti Feeds exhibits high volatility with a beta of 1.58, indicating the stock moves 58% more than the broader market. The one-year volatility of 51.29% is substantially higher than the Sensex's 11.52%, classifying this as a "HIGH RISK HIGH RETURN" investment. Whilst the risk-adjusted return of 1.26 is positive, the elevated volatility means investors should be prepared for significant short-term price swings.
The stock's recent surge has pushed it to within 1.23% of its 52-week high of ₹1,208.00, which it briefly touched during the day's trading session. This proximity to all-time highs, combined with the parabolic price movement over the past three months, suggests limited near-term upside and elevated risk of profit booking. The weighted average price of ₹1,153.05 for the day indicates sustained buying interest across price levels.
Investment Thesis: Quality Company at Fair Valuation
Avanti Feeds presents a compelling investment case built on several structural strengths. The company operates in the high-growth aquaculture sector, benefiting from rising protein consumption and India's expanding seafood export market. Its leadership position in shrimp feed manufacturing, technical collaboration with Thailand's Thai Union Group, and integrated business model spanning feed production, hatchery operations, and shrimp processing provide competitive advantages.
The company's financial quality credentials are impressive. With an average ROCE of 73.75% and latest ROCE of 260.64%, Avanti Feeds demonstrates exceptional capital efficiency. The virtually debt-free balance sheet (net debt to equity of -0.91) and strong interest coverage provide financial flexibility and downside protection. Consistent profitability, zero promoter pledging, and a track record of dividend payments further enhance the investment appeal.
KEY STRENGTHS ✓
- Exceptional Capital Efficiency: ROCE of 260.64% and average of 73.75% demonstrates superior returns on invested capital
- Debt-Free Balance Sheet: Net cash position with debt-to-equity of -0.91 provides financial flexibility
- Margin Expansion: PAT margin improved 149 bps YoY to 11.82% despite revenue pressures
- Market Leadership: Leading position in shrimp feed manufacturing with strong brand equity
- Stable Promoter Base: 43.23% promoter holding with zero pledging indicates strong management alignment
- Strong Cash Generation: Operating cash flow of ₹584 crores in FY25, up from ₹260 crores in FY24
- Attractive Valuation: PEG ratio of 0.55 suggests reasonable valuation relative to growth
KEY CONCERNS ⚠
- Revenue Volatility: Q3 FY26 sales declined 14.01% QoQ, reflecting seasonal and cyclical pressures
- Moderating Growth: Revenue growth decelerated to 4.50% in FY25 from 22.80% in FY22
- Sequential Profit Decline: Consolidated net profit fell 2.55% QoQ despite margin improvement
- Lower ROE vs Peers: ROE of 16.10% trails peers like Gillette India (40.86%) and Emami (29.50%)
- Deteriorating Receivables: Debtors turnover ratio at lowest level of 27.12 times suggests collection challenges
- High Stock Volatility: Beta of 1.58 and volatility of 51.29% indicates elevated risk profile
- Near 52-Week High: Trading just 1.23% below peak raises risk of near-term profit booking
However, several concerns temper the bullish thesis. The recent revenue volatility and sequential profit decline in Q3 FY26 raise questions about demand sustainability. The company's five-year sales CAGR of 8.08% is respectable but not exceptional, and the deceleration to 4.50% in FY25 suggests growth headwinds. The lower ROE compared to FMCG peers and deteriorating debtors turnover ratio are additional monitoring points.
The stock's recent parabolic price movement and proximity to 52-week highs also warrant caution. With gains of 48.55% in just one month and trading at a P/E of 26.28 times, much of the positive news appears priced in. The high beta of 1.58 and volatility of 51.29% mean the stock could experience sharp corrections if broader market sentiment turns negative or if quarterly results disappoint.
Outlook: What to Watch
POSITIVE CATALYSTS
- Sustained Margin Expansion: Continued improvement in operating and PAT margins above 12% and 11% respectively
- Revenue Growth Recovery: Quarterly sales consistently above ₹1,500 crores with positive YoY growth
- Improved Working Capital: Debtors turnover ratio improving from current low of 27.12 times
- Institutional Buying: Increase in FII and MF holdings beyond current 11.74% combined stake
- Export Momentum: Strong shrimp export demand driving feed sales growth
RED FLAGS
- Continued Revenue Decline: Sequential sales contraction for two or more consecutive quarters
- Margin Compression: Operating margins falling below 11% or PAT margins below 10%
- Working Capital Deterioration: Further decline in debtors turnover or negative operating cash flow
- Institutional Selling: Significant reduction in FII or MF holdings indicating waning confidence
- Debt Increase: Any meaningful increase in debt levels compromising the current net cash position
The outlook for Avanti Feeds hinges on its ability to sustain margin improvements whilst reigniting top-line growth. The aquaculture sector's long-term fundamentals remain favourable, driven by rising seafood consumption, export opportunities, and India's competitive advantage in shrimp farming. However, near-term demand visibility remains clouded by seasonal factors, weather patterns affecting shrimp cultivation, and global seafood market dynamics.
Management's ability to maintain operating margins above 12% whilst driving revenue growth will be critical. The company's integrated business model, spanning feed production to shrimp processing, provides some insulation from raw material volatility and demand fluctuations. The strong balance sheet offers flexibility to invest in capacity expansion, technology upgrades, or strategic acquisitions to drive the next phase of growth.
The Verdict: Selective Accumulation for Long-Term Investors
Score: 70/100
For Fresh Investors: Consider accumulating in tranches given the recent sharp rally and proximity to 52-week highs. The stock offers good long-term value at current levels, but near-term volatility risk is elevated. Investors with a 2-3 year horizon can initiate positions, but avoid aggressive buying at current levels. Wait for pullbacks towards ₹1,050-1,100 for better risk-reward.
For Existing Holders: Continue holding with a long-term perspective. The company's strong fundamentals, debt-free balance sheet, and margin expansion trajectory justify the current valuation. However, consider booking partial profits if the stock rallies another 10-15% from current levels to rebalance portfolio risk. Maintain core holding given the quality of the business and sector tailwinds.
Fair Value Estimate: ₹1,250-1,300 (5-9% upside from current levels)
Note— ROCE = (EBIT - Other income)/(Capital Employed - Cash - Current Investments)
⚠️ Investment Disclaimer
This article is for educational and informational purposes only and should not be construed as financial advice. Investors should conduct their own due diligence, consider their risk tolerance and investment objectives, and consult with a qualified financial advisor before making any investment decisions. Past performance is not indicative of future results. The stock market involves risk, and investors may lose their entire investment.
