Some General pointers for basic understanding of the cyclicality in the shrimp business and mapping the points discussed in the Q2FY24 with the company:
- Normally, the shrimp culture season starts in end of January or February
- Shrimp Feed Consumption :
- Raw Material pricing : Major component of expenses
Ecuador Vs India explained :
Cost Structure Comparison :
Financials
- Sales have not seen any improvement in the last couple of years due to fall in shrimp prices and Ecuador chipping in market share.
- But we have to see what has led to the fall in expenses which seems like to be the reason for a growth in profit?
- Snippet from con-call
- Seeing the Operating Profit Margin trend, single digit has been seen only in 2013 which was a decade back, from there on the margins had improved.
- Also there has been other income increase
BALANCE SHEET
-
Why have the trade payables increased so much, it is a liability after all so need to be looked at because due to this the profits would have an upward bias
-
They are holding extra cash than what they used to
- Not much investment opportunities ?
- Not sure about the near future ?
Answer : Received from con-call
Ratio Analysis
- Seeing the last 5 years PE ratio, 15 times has provided a value comfort and as the margins improve we can see it go 22-24 times i.e. 50%+
- The increase in debtors is a seasonal play and would be in single digits only as mentioned by the management
Growth Triggers :
- Optimistic outlook for an increase in sales in the second half of FY24
- ************************First Area : New plant coming up which would start contributing to sales
- More on Second Area – Pet Care :
************************************Additional Benefits :************************************
Risks :
- Possibility of an imposition Tariffs/Quotas by US to regulate import prices
- Possibility of a further increase in raw material prices like Soya & Fish Meal
Technical Analysis :
With an intermediate support of 375( No reco, do your own due diligence)
I have summarised the point in this thread too – https://twitter.com/Lakshayy_99/status/1728689844136943949.
Do let me know your thoughts, and correct me if there’s any thing incorrect. Hope you gained some insight from this 
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