Ever seen a script move up from Rs 34 to Rs 36 just because you bought 750 shares in the open market ? I have, with Avanti Feeds.
AVANTI FEEDS, a company based out of Hyderabad with manufacturing facilities all over Andhra Pradesh sells animal feed (for fish and shrimp) and processes shrimp for the export market. While the feed division produced 60,000 MT`s(metric tons) of animal feed, the shrimp processing division produced 2000 MT`s(2011-12). For comparison, in 2009-10, the company produced 16,000 MT`s of feed and 1000 MT`s of processed shrimp.
Why the massive jump in sales ?
It is due to the introduction of an exotic species of shrimp called P.vannamei in India. This species(originally from South America) has become famous in Asia (and the world over) with nearly 75% of the shrimp produced in Asia being of the above variety. Experts believe that the switch in India from the traditional black tiger prawn variety to the Vannamei is due the following: 1) Lower cost of production 2) Lower cycle time and 3) Higher yield .
http://pib.nic.in/newsite/PrintRelease.aspx?relid=94595
As per the above Indian government website, marine product exports have crossed $ 3.5 bn for the first time in the year 2011-12, a growth of 30% compared to the previous year. Frozen shrimp exports constitute nearly 50% of all marine exports from the country(recording a 50% growth in 2011-12 thanks to vannamei and drop in US anti dumping duty from 12% to 2%), underscoring the importance of this sector to the Indian marine industry.
The above Economic times article is typical of the challenges faced by this new variety of shrimp, with the biggest concern being the unknown pathological risks involved in producing it. Although the government is taking stringent measures to control the inflow of broodstock into the Indian market, these are still early days and the new industry is bound to face some ups and downs.
Balance Sheet
One of the first reasons for buying Avanti Feeds in late 2010 was that the script was a net net(market cap < working capital). Currently, the stock trades at a P/E multiple of 3x (using FY 2011-12 earnings) and its CMP at Rs 100 is below the book value of Rs 106. With a market capitalization of Rs 90 Crs, debt less than Rs 50 Crs, cash balance Rs 22 Crs and a consistent dividend payout for the last 6 years (2011-12 dividend Rs 6.5), this is a real value pick assuming that you are ready to handle the ups and downs of the script(Rs 200 to Rs 100 in last 5 months).
Avanti Thai Aqua Feeds Pvt Ltd (ATAF)
Avanti Feeds in collaboration with Thai Union Frozen Products Ltd (world`s largest tuna canner) setup ATAF, a JV with a share capital of Rs 7.83 Crs to build a 10000 MT shrimp feed plant in Gujarat. Thai Union also took a 15% stake in Avanti Feeds Ltd. Subsequently, in 2011-12 ATAF was amalgamated into Avanti Feeds and Thai Union`s stake in Avanti increased to 25%. Currently, 2 executives from Thai Union are on the Board of Avanti Feeds providing valuable industry inputs. Moreover, the R&D and technology transfer assistance from Thai Union to Avanti will be of significance in the coming future.
Major Shareholders
Promoters (41%), Thai Union (25%), Andhra Pradesh Industrial Development Corp (6%) and FII`s (0%) [remember what Mr Rakesh Jhunjhunwala says about the growth potential of good small cap companies with low FII holding]
A booming seafood export industry, technical and market assistance from a world class multinational, low debt, low FII holding and a market price below book value. Avanti Feeds is the perfect recipe for making a fortune.
thepokaranmoneymanager 
Could you please have a look at Noida Toll Bridge Company?
Hello Sir
Noida Toll`s balance sheet and P&L look very good no doubt. But the actual business of road tolls seems to hold many major contingent liabilities.
1) The company`s road is already competing with 2 other FREE roads (Nizamuddin bridge and Okhla barrage). The Noida authority has started extension work on the Okhla barrage (Until 2011, NOIDA authority was not allowed to do so because of the non-compete cause with NOIDA toll company).
2) Although the company has recently received a tariff increase, it looks unlikely that the tariff will hold good into the future. 1) This is election year and 2) Just like in Maharashtra, there is a lot of opposition to paying toll. I believe that protests have already started against this specific tariff hike and the UP government is looking at measures to make retrospective changes.
3) Delhi Metro is going to be another major public competitor.
I believe that the reason why many value investors (PPFAS mutual fund`s chief Mr Parikh seems to be a great fan of NOIDA toll) like NOIDA toll stock is because of Mr Warren Buffet`s quote
“In an inflationary world, a toll bridge (like company) would be a great thing to own because you’ve laid out the capital costs. You built it in old dollars and you don’t have to keep replacing it”
Atleast in the US, a toll bridge is a near monopoly where the government allows you to keep increasing tariffs with inflation. It works out in a country that follows an unbridled laissez-faire kind of capitalism with very little or no government intervention. Unfortunately, India is not the place to invest in a toll bridge. Atleast not in the near future.
http://neerajmarathe.blogspot.in/2014/03/noida-toll-bridge-alternate-view.html
http://neerajmarathe.blogspot.in/2012/11/noida-toll-bridge-few-disturbing.html
Irrespective, the Noida toll stock may still move up irrespective of all the above liabilities. Currently, the Indian markets are so high on adrenaline that anything is possible. My above comments are only related to the business of Noida toll.
Hello Sir, I am also from Chennai. Happened to know about you on moneycontrol mmb and found about your blogspot. I read with mirth your opening statement of the avanti discussion. Please keep my id in your mailing list for future multibaggers that you recommend. Am not looking for get rich quick ideas but steady growers. Thanks and regards.
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