Buy Apex Frozen Foods Ltd For Target Rs.430 By Geojit Financial Services Ltd
Pricing Carries the Quarter; Volumes Next
* Q1FY27 revenue was flat YoY at Rs. 257cr. Shrimp volumes declined 13%YoY to 2,624MT because of labor shortages in April–May and war-related shipping disruptions. A 14% increase in realization made up for the lower volumes.
* Gross margin expanded 840bps YoY to 41.2%. EBITDA nearly doubled to Rs.30cr, with margin improving 580bps YoY to 11.8%, moving back above the pre-Covid range of 10–11%. PAT grew 138% YoY to Rs.22cr.
* With the US tariff now settled at 10%, American buyers returned, lifting the US share of revenue to 70% from 54% in Q1FY26. The EU/UK share eased to 25%, as testing and customs clearance delays deferred shipments into Q2.
* The India–UK FTA came into force on 15 July 2026, while the India-EU FTA is expected to be in place around the turn of the year
Outlook & Valuation
The company delivered robust earnings despite weak volumes, supported by higher realizations. The next phase of growth is expected to be volume-led. Management retained its FY27 volume guidance of ~12,000 MT, supported by an order book extending into midQ3 and a growing share of ready-to-eat (RTE) products (targeted at 18-20% of volumes vs. 12% in FY26). Over the medium term, the India-EU FTA, expected by early 2027, remains the key catalyst, while any reduction in the US countervailing duty in the upcoming review in December would provide additional support. However, with farm gate prices rising 6-7% in recent weeks and freight costs increasing due to war-led disruptions, we factor in some moderation in margins from Q1 levels. We expect revenue/EBITDA to grow at a 19%/42% CAGR over FY26–28E. We value Apex at 17x FY28E EPS and maintain our BUY rating with a revised target price of Rs.430.
Key Concall Highlights
* FY26 shrimp volume was 10,286MT, compared with 10,534MT in FY25. The US made up 48%, Europe 47% and others 5%, with the EU share up from 39% a year earlier.
* Average realisation was ~Rs.930/kg, up from Rs.812/kg in Q1FY26 and Rs.830/kg in Q4FY26. A weaker rupee, firmer dollar prices and a better mix all helped. Q2 realisation is expected at a similar level.
* RTE made up 16% of volumes (15% in Q1FY26) and is guided to reach at least 18–20% in FY27. RTE earns a minimum of $0.50/kg more margin than RTC.
* Capacity utilisation was 38% (39% YoY). Management aims to keep it at 35–40% through the year and sees 14,000–15,000MT as the next milestone, depending on the FTAs.
* Farm-gate prices were stable in Q1 but have risen 6–7% over the past 3–4 weeks. Ocean freight has more than doubled since Q4FY26.
* Exports to Japan have restarted after more than a decade. Russia is likely by the end of Q2 or Q3, and Australia is waiting on customer audits.
* The US tariff stays at 10% and is borne by customers. The ADD (now 3.4%) final review is due in September. The CVD review in December could lower duty by 5.77%, with refunds.
For More Geojit Financial Services Ltd Disclaimer https://www.geojit.com/disclaimer
SEBI Registration Number: INH200000345
