Building a successful portfolio can be challenging. However, there is no better time to create one than during a market carnage, when stocks are cheap.
However, again, knowing what to buy is tough. So, we have done the work for you and are sharing two stocks worth watching in this market. Mayuresh Joshi of William O’Neil has shared these stocks as part of the Champions Trophy Winning-11 Portfolio. They are selected on attributes such as aggression, consistency, all-around performance, and X-factor.Here are the picks:
The first stock on the list is Avanti Feeds, which William O’Neil India described as having the aggressive traits of Captain Rohit Sharma.
Avanti dominates the processing and distribution of shrimp feed products, with a 50% market share in the domestic feed business. It has five shrimp feed manufacturing units and two shrimp processing units in India.
Avanti Feeds is an export-focused company. In FY24, 83% of its revenue came from North America, 11% from Europe, and the remaining from Asia. 80% of its revenue comes from shrimp feed, while 20% comes from shrimp processing.
The company’s revenue growth remained stagnant for 3 years due to stiff competition from Ecuador, the world’s largest shrimp exporter and producer. In addition, high freight rates, disruptions in the Red Sea and muted international prices impacted the company.
Its consolidated revenue during FY22-24 was stuck in the ₹50-53 billion range. Its profit, however, grew from ₹2.4 billion in FY22 to ₹3.9 billion, but it remains at the same level as ₹3.9 billion in FY21. The margin increased from 8% to 11.1% during the period.
Notably, the company’s profit declined from ₹3.9 billion in FY21 to ₹2.4 billion in FY22 due to a drop in margin to 8% from 13.5%. However, the company gradually regained some margin, improving to 11.1%, leading to improved profit.
Nevertheless, the company has shown good growth in FY25 due to favourable industry prospects. In 9MFY25, while its revenue grew 3.5% year-on-year (YoY), profit rose 42% to ₹4.0 billion. The improved profit growth also widened its margins to 13.5%.
The company is debt-free and has strong return ratios. Its return on capital employed (RoCE) and return on equity (RoE) are 28.7% and 29.3%, respectively. This reflects its ability to generate returns from invested capital.
Improvement in demand, government measures, reduced competition, and new business, including pet care, contributed to the growth. Moreover, reducing raw material prices, higher utilisation and margins in the feed segment also played a part.
The company also benefited from rising shrimp prices due to drought and energy shortages causing production challenges in Ecuador.
Looking ahead, the Company expects to benefit significantly from sectoral tailwind resulting from the government’s aim to strengthen India’s aquaculture industry, the world’s second-largest fish production and aquaculture market.
To this end, the government has allocated ₹27 billion for the fisheries sector in Budget 2025 (3% higher than last year) and ₹24 billion for the Pradhan Mantri Matsya Sampada Yojana—Department of Fisheries—to strengthen the industry.
This is in addition to the ₹200 billion allocated to the Fisheries and Aquaculture Development Fund in Budget 2024 to increase the sector’s productivity and yield.
In addition, the government has cut taxes to help Indian producers compete better in the global seafood market. It reduced the basic customs duty (BCD) on fish hydrolysate and frozen fish paste to 5% from 15% to 30%, respectively. It plans to double aquaculture exports to around ₹1 trillion, as a result of which Avanti will benefit too.
Additionally, the government wants to harness the marine and seafood resources from the untapped Indian Exclusive Economic Zone (EEZ) and the vast oceans, especially from islands like the Andaman and Nicobar.
The move boosts the sector, as vast untapped resources exist beyond the current fishing limit of 12-nautical-mile territorial waters. In particular, there is significant potential for commercial exploitation at depth.
Mesopelagic resources such as myctophids – the world’s most abundant but largely untapped fish – are found at this depth. They are rich in fatty acids, lipids that may have significant potential for industrial, medicinal and nutraceutical applications.
On the other hand, the EEZ’s current harvestable potential limits stand at 7.1 million tonnes (MT), and India is currently harvesting about 4 MT. This leaves a large room for expansion and utilising another 3.1 MT of resources from the area.
In addition, Avanti has expanded into pet care products—a market that is set to double to $2 billion by 2030, according to the pet food industry. It is also setting up a manufacturing facility for pet food, which will begin production by the end of 2026.
Avanti Feeds Share Price shows strength in this corrective phase of the market, with year-to-date (YTD) return of 25%.
Avanti Feeds’ valuation remains at a marginal premium to its 10-year median price-to-equity (P/E). It is currently trading at 24x, 17% lower than 20x, which can be justified due to improved industry prospects.
Sarda Energy & Minerals is compared to Shubhman Gill, an aggressive player. Sarda Energy is the flagship company of the Sarda group. It is a vertically integrated steel producer with captive iron ore and commercial coal mines.
It also manufactures and exports niche-grade manganese-based ferro alloys, with self-sufficient captive power from waste heat and coal.
Furthermore, the company has diversified its portfolio by strategically acquiring SKS Power, marking a significant foray into the energy sector. It also has presence in hydropower projects through special project vehicles.
Talking about the financials, the numbers look strong, especially on the profit front. Its sales have grown at a CAGR of 11% over the last 5 years to ₹38.6 billion in FY24. In contrast, its profit has grown at almost double the rate to ₹5.2 billion.
Its stock price rose 113% during this period, while RoE averaged 18%.
Its 9MFY25 performance remains strong, too. Revenue rose 14% YoY to ₹34 billion, driven by strong 23% growth in coal production and 6% in hydro power. Profit grew 38% to ₹6.0 billion, with a margin of 31%.
Looking ahead, the company expects steel demand to increase due to government spending on infrastructure projects and improved private investment. It has planned expansion in various sectors to tap the diverse demand triggers.
The company has planned three projects, which are expected to start production by the end of FY25.
The first is a solar power project, which will help reduce costs and the company’s carbon footprint. The cost savings will not only help the company’s margins but also increase its profitability.
This is followed by a hydro power project and a mineral wool project.
Moreover, the company is expanding mining capacity from 1.68 million tonnes to 1.8 million tonnes. Further, it has acquired the Gare Palma IV/5 coal mine with geological reserves of 78 million tonnes. Coal extraction from this facility is expected to start in FY26.
The diversification of revenue streams yields consistent cash flows for the business, insulating it against steel industry cyclicality. It expects strong operating performance from the energy sector, which is expected to be a major contributor to EBITDA.
Growth prospects look promising, evident from the promoter buying, who increased their stake from 72.64% in June 2024 to 73.16% in December 2024.
Sarda Energy stock price is up 12.5% year-to-date and 171% in the last one year.
After such a strong rally, however, its valuation has become stretched. It’s trading at a P/E of 28, much higher than the 10-year median P/E of 5.8.
Conclusion
In technical analysis parlance, stocks showing strength in a correcting market remain strong contenders to outperform and lead the next rally. Both Avanti Feeds and Sarda Energy are standing tall and trading near 52-week highs, showing exceptional strength.
Avanti Feeds is riding on the industry momentum with favourable demand conditions, aided by the government’s ambitious focus on doubling exports. On the other hand, Sarda Energy is benefiting from a diversified revenue stream and is expected to benefit significantly from capacity additions.
It remains to be seen whether they can keep up this momentum.
Disclaimer:
Note: We have relied on data from www.Screener.in throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.
The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
About the Author: Madhvendra has been deeply immersed in the equity markets for over seven years, combining his passion for investing with his expertise in financial writing. With a knack for simplifying complex concepts, he enjoys sharing his honest perspectives on startups, listed Indian companies, and macroeconomic trends.
A dedicated reader and storyteller, Madhvendra thrives on uncovering insights that inspire his audience to deepen their understanding of the financial world.
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Disclosure: The writer and his dependents do not hold the stocks discussed in this article.
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