Seafood stocks dip amid margin pressure and competition

ET Intelligence Group: Shares of seafood companies fell 3-7% on Friday after a sharp four-day rally that followed euphoria over the India-US trade deal announcement on February 2. Despite a better medium term outlook due to the deal, which is expected to boost marine exports from India, investors are observing caution given the near-term challenges including margin pressure amid intense competition. The sector’s outlook will hinge on how the trade negotiations progress and the American tariff stance for other seafood-exporting nations.

The trade deal between the two nations is crucial for the Indian marine exports since the US is India’s largest market with 36.3% share in FY25, according to the data from the government’s Niryat (exports) portal. In addition, frozen shrimp makes up nearly two-thirds of India’s marine shipments to the US.

India Ratings and Research (Ind-Ra) expects a lower tariff rate to improve India’s cost position relative to Ecuador, Vietnam and Indonesia. This may also help reverse the slowdown in exports seen between August and November 2025 when Indian shipments to the US sharply declined amid effective duty rates as high as 58% compared with 18-49% for other exporting countries. Ind-Ra also expects the shrimp processing industry to fare better than its earlier forecast of a 12% year-on-year revenue decline and a 150-basis points margin compression for FY26. Improved order visibility is also likely to ease working-capital pressures.

According to CareEdge, shrimp exports to the US rose 5% during the five months to August and then fell by 35% in August over July 2025, following strong frontloading of volumes ahead of higher reciprocal US tariffs. Indian exporters shifted towards other countries, but it affected profitability given that the US market generates higher value.
This is reflected in the financial performance of top marine exporters. Revenue growth for a sample of six exporters improved year-on-year for two quarters to September 2025, but margins softened, with average operating margin before depreciation and amortisation (Ebitda margin) slipping to 5.3% in the September quarter from 6.7% in the June quarter.

Though the trade deal has boosted hopes of a US market recovery, with the peak holiday season over and global demand set to soften in 2026, analysts expect the rebound to be gradual.
Shares of marine exporters jumped 6-31% on the BSE in five trading sessions since February 2, following the announcement of the India-US trade deal. Avanti Feeds and Waterbase were the top gainers, rising 31% and 27% respectively, while Sharat Industries and Coastal Corporation saw comparatively smaller gains of about 6% and 10%.