Avanti Feeds profit drops 55% despite sales growth

Avanti Feeds Limited (NSE: AVANTIFEED) reported a weak Q2 FY27 performance, with consolidated revenue from operations increasing 8.9% YoY to ₹1,752.5 crore. However, net profit declined 56.2% to ₹73.92 crore, compared with ₹168.79 crore in the corresponding quarter last year. Key Highlights • Revenue increased 8.9% YoY to ₹1,752.5 crore. • Consolidated net profit declined 56.2% to ₹73.92 crore. • Operating profit fell approximately 59.8% to ₹78 crore. • Operating margin contracted to 4.5% from 12.1% a year earlier. • Cost of materials consumed increased 35.1% to approximately ₹1,496 crore. • Total expenses increased 18% to approximately ₹1,689 crore. • The company reported an exceptional charge of ₹17.12 crore during the quarter. My View Avanti Feeds' results highlight the pressure that rising input costs can place on businesses, even when revenue continues to grow. Revenue growth of 8.9% is encouraging, supported by an 18.9% increase in the shrimp feed segment. However, profitability has deteriorated significantly. Material costs increased much faster than revenue, putting considerable pressure on operating margins. The 760 basis point contraction in operating margin deserves attention, particularly because the company operates in a business where raw material costs can significantly influence profitability. What I'm Watching Next I will monitor raw material prices, shrimp feed demand, processed shrimp exports and operating margin recovery. The key question is whether Avanti Feeds can restore its margins while maintaining revenue growth. Stance: Cautious. Revenue growth and strength in the shrimp feed segment are positive, but the sharp decline in operating profitability and margin compression require attention. Disclosure: I do not have any holding or position in the stock mentioned above. AVANTIFEED