Nov 24th 2017 – Avanti feeds

Friends – I am buying Avanti feeds at current levels of Rs. 2600-2700.

You can read more about this company  Click Here

There is a temp setback to this industry as there is an EU inspection on the shrimp exporters expected shortly – EU had increased inspections of Indian shrimp exports last year to 50% sampling and they have found increased number of rejections in the past year.

Having said that, I believe that the Indian Shrimp export industry is a mature industry. My conviction is that this industry will be able to overcome this issue and will continue to do well. Hence this recommendation.

Even though the stock price looks high – it has an attractive PEG of 0.69. The top line and bottom line of the company is growing at appx 50% per annum over the past five years. The company is investing in expanding its capacity. The overall operation is very profitable – the ROE is 42%.

Using the past ten year data, my calculations show that this stock should do well in the future. My expectations are 15-20% CAGR over the next 3-5 years. Hence I am buying this stock