Avanti Feeds – I

I chose to value Avanti Feeds based on my screen for high growth companies with low P/E ratio and low debt.

Numbers and Narratives

Avanti Feeds is an industry leader in the shrimp feed business from which it garners its primary income. It is a high growth – low margin company with consistent longterm investment. I expect the growth to plateau over the next 5 years as the company matures and the margins to stay low because of the nature of business.

The core numbers that I arrive at based on the story are

  • Compounded revenue growth for next 5 years = 15% (19% historical)
  • EBIT margin in year 10 = 12% (13% most recent year)
  • Initial cost of capital = 11.36%


I’ve used the above numbers along with the financial information to compute my DCF valuation for Avanti Feeds as seen below.

As you can see, the valuation price came out to ₹538.12, about 20% higher than the last traded price of ₹450.70.




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