Aquaculture stocks soar after govt slashes customs duty on shrimp feed

Aquaculture companies garnered interest in Wednesday's trade after the government proposed to slash customs duty on shrimp feed to promote exports. Shares of Avanti Feeds, Coastal Corporation, and Waterbase soared up to 20 per cent in trade, as against a 2.05 per cent climb in the S&P BSE Sensex.

In the Union Budget 2023-24, the government announced a reduction in customs duty on key inputs for producing shrimp food, which would gradually generate marine exports. According to the India's Ministry of Commerce and Industry, India's exports of prawns and shrimps feed jumped 132 per cent to Rs 18,311 lakh in 2022-23 (April-November).

Analysts shared an optimistic tone over the government's step towards enhancement and development of horticulture. 

"Companies like Avanti Feeds and Apex Frozen will benefit from Rs 60,000 crore outlay plan set for fisheries. With Rs 2,200 crore allocated to horticulture development, these steps taken by the government will lead to the enhancement of other crops and agriculture," said Urmi Shah, Research Analyst, SAMCO Securities.

However, so far this fiscal year (FY23), shares of Avanti Feeds, Coastal Corporation, and Waterbase were under pressure, as they slumped up to 37 per cent. In comparison, the S&P BSE Sensex gained 1.57 per cent, during the same period.

In the July-September quarter of FY23, Avanti Feeds gross income rose 8 per cent year-on-year (YoY) to Rs 1,349 crore, while profit before tax (PBT) soared 137 per cent YoY to Rs 90 crore in Q2FY23. As the company manages almost a quarter of the aquafeed market in India, the management projected shrimp exports to be around 13,000 metric ton in FY23.

Besides, Coastal Corporation reported a 17 per cent YoY decline in total revenues to Rs 10,093 lakh in Q2FY23. PBT, too, slumped 13 per cent YoY to Rs 933 lakh in the second quarter of FY23.