Budget 2024 Impact: Shrimp stocks like Avanti Feeds, Apex Foods soar up to 20% – here’s why

Budget 2024: Shares of shrimp and seafood companies surged by up to 20 percent on Wednesday after Finance Minister Nirmala Sitharaman announced a significant proposal to support shrimp farming and marketing in the Union Budget for 2024-25.

In her budget presentation, FM Sitharaman outlined plans to provide financial support for establishing a network of Nucleus Breeding Centres for Shrimp Broodstocks. Additionally, financing for shrimp farming, processing, and export will be facilitated through the National Bank for Agriculture and Rural Development (NABARD).

"India’s seafood exports in the last financial year reached an all-time high of over ₹60,000 crore, with frozen shrimp accounting for about two-thirds of these exports. To enhance their competitiveness, I propose to reduce the Basic Customs Duty (BCD) on certain broodstock, polychaete worms, shrimp, and fish feed to 5 percent. I also propose to exempt customs duty on various inputs for the manufacture of shrimp and fish feed," she stated while announcing the Union Budget for 2024-25 (FY25).

The announcement has been received positively by the market, leading to significant gains in the shares of shrimp and seafood companies as investors anticipate growth and increased profitability in the sector due to the proposed financial and policy support.

Shares of Waterbase zoomed 20 percent to ₹102.18 apiece. Meanwhile, Apex Frozen Foods also surged 20 percent to ₹311.75 apiece, also its record high and Avanti Feeds rallied 14.3 percent to its new high of ₹737.55 apiece.

Among other stocks, Zeal Aqua and Mukka Proteins jumped 10 percent while Kings Infra advanced as much as 8.6 percent and Godrej Agrovet added 5.5 percent. BKV Industries was also locked in its 5 percent upper circuit at ₹13.23.

In a recent report, CareEdge highlighted India's position as the world's second-largest aquaculture producer after China and one of the largest exporters of seafood globally. Over the past decade, shrimp production in India has seen an impressive growth of 255 percent, with production reaching 11.6 lakh MT in FY23 compared to 3.3 lakh MT in FY14.

Shrimp exports, which constitute approximately 70 percent of India's marine exports, have also experienced remarkable growth. From FY14 to FY23, shrimp export volumes increased by 136 percent, and their value in INR terms grew by 122 percent. However, FY24 saw a deviation from this trend, with a 10 percent moderation in exports in INR terms, primarily due to international pricing pressures.

The report noted that the global shrimp export market is dominated by India, Ecuador, Vietnam, Indonesia, Thailand, and China, which together hold a market share of around 75 percent by value in USD terms. The global shrimp export market grew at a compounded annual growth rate (CAGR) of 4.90 percent over the past decade, rising from US$15,262 million in CY13 to US$24,600 million in CY22, driven by an increase in volumes from 1.88 million tonnes to 2.37 million tonnes.

CareEdge also highlighted several challenges facing the Indian shrimp industry, including muted international prices, tariff and non-tariff protection measures by major export destinations, increasing anti-dumping duties, rejections, growing competition, and geographical concentration. In response to these challenges, the Government of India has set an ambitious seafood export goal of ₹1.0 lakh crore, up from ₹61,000 crore in FY24, supported by various government schemes aimed at revitalising agricultural vigor.

"While the outlook for the shrimp industry is expected to remain stable, the Indian shrimp industry faces high competition and challenges on the global front," said Arindam Saha, Director at CareEdge Ratings. "The country is trying to regain its top position in the global field, leveraging government initiatives to improve product quality and productivity, reduce wastages and rejections through improved infrastructure like cold storage chains and the presence of testing laboratories. This is expected to boost India's global market share in the shrimp industry."

Gopal Pansari, Associate Director at CareEdge Ratings, emphasised the need for the industry to diversify its markets and products. "The industry prospects demand broad basing the markets through premiumisation of products and geographical diversification of exports for the sustainable growth of shrimp industry players in the country, going forward," he said.

India's shrimp industry, despite facing numerous challenges, holds significant potential for growth and increased global market share, supported by strategic government initiatives and industry efforts to enhance quality and productivity.

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