Avanti Feeds profit falls 55% as margins shrink

Avanti Feeds Limited reported a 54.9% year-on-year decline in Q2 FY27 net profit to ₹69 crore, despite an 8.9% increase in revenue to ₹1,752.5 crore. The earnings pressure was largely driven by a sharp decline in operating profitability. EBITDA fell 59.8% to ₹78 crore from ₹194 crore in the corresponding quarter last year. EBITDA margin contracted significantly to 4.45% from 12%, indicating that higher revenue has not translated into better operating performance. For an aquaculture feed manufacturer like Avanti Feeds, feed costs, shrimp farming economics, export demand and realisations play an important role in determining margins. The current results suggest that cost pressures or weaker operating realisations have outweighed revenue growth. The nearly 760 basis point margin contraction is more concerning than the decline in net profit alone, as it points to pressure at the operating level. My view is cautious in the near term. Revenue growth remains positive, but the sharp fall in EBITDA suggests that the business needs a meaningful improvement in operating margins before earnings recovery can be considered sustainable. I would watch the next quarterly results for a recovery in EBITDA margin, particularly towards the 8-10% range, along with trends in shrimp feed demand and export realisations. On the technical side, the stock is trading at ₹706.45, down 2.23% on the NSE. The immediate focus should be on price stability and whether buying interest emerges after the earnings reaction. A sustained recovery without improvement in earnings quality may be difficult to maintain. Stance: Cautious. Fresh bullish conviction would require evidence of margin recovery and improving operating profitability. AVANTIFEED Disclaimer: This post is for informational purposes only and not a recommendation to buy or sell any securities. I, or my family, associates, or relatives, may have a financial interest in the securities mentioned.