Profitability to be cushioned by steady volume growth, rupee weakness

CRISIL Research expects seafood exports to grow 17-18% in fiscal 2019, 500-700 basis points (bps), slower than the 23% and 25% logged in fiscals 2017 and 2018, respectively. But that would be still robust considering that growth would come over a high base.

Exports volume is seen growing 20-21%, apace with the past two years.

In recent years, Indian seafood exports have been driven by shrimps, revenue from which grew at 21% and 31% in fiscals 2017 and 2018, respectively, even as Chinese, Vietnamese and Thai production was hit by the dreaded early mortality syndrome.

The global supply shortage that ensued had shored up realisations for Indian exporters to a whopping 56% on-year in fiscal 2014, but then tempered to 2% and 5% in fiscals 2017 and 2018, respectively, as supplies improved.

Now, two factors are threatening to crimp realisations - one, a spurt in supply following increased production of Vannamei shrimps in India and other key exporting countries, and two, slower offtake from the US, a major importer.

Consequently, US shrimp export realisations (in dollar terms), that account for 70% of export value, are expected tofall ~10% in fiscal 2019. However, steady volume growth and expected depreciation in the rupee will limit the impact.