Rupee depreciation to aid realisations; operating margin and credit profiles seen steady

India’s shrimp exports are set to exceed Rs 50,000 crore this fiscal—up 13-15 per cent on-year after three years of stagnation— shaking off steep United States (US) tariffs by deftly engaging with, and shipping to, other markets.

Revenue growth will be driven by higher realisations, stemming from sharp depreciation of the rupee against the dollar and euro. Meanwhile, overall export volume is seen growing 6-7 per cent , despite loss of business in the US due to higher tariffs.

Next fiscal, export volume is projected to grow 3-5 per cent as supply improves, driven by an increase in aquaculture production by farmers in anticipation of higher demand, especially from the US owing to a likely reduction of tariffs to 15 per cent , on par with other competing nations. Shipments to new markets will also aid growth.

Operating margin is expected to remain steady at 7.0-7.5 per cent this fiscal and the next, as the benefits from tariff reduction are passed on to customers. Despite potential temporary volatility in working capital requirements, the credit profiles of players will continue to be stable due to low long-term debt.

An analysis of 63 shrimp exporters rated by us, accounting for ~55 per cent of the industry’s revenue, indicates as much.

Overall export volume grew ~9.5 per cent in the first three quarters of this fiscal, despite a drop of ~15 per cent in volume to the US, the largest market for Indian shrimp, amid higher tariffs. As a result, the share of US exports could drop to 32-33 per cent this fiscal from 40 per cent last fiscal, despite frontloading of shipments until August 2025 in anticipation of higher tariffs. Next fiscal, US sales are expected to reach their previous levels.

Free-trade agreements1, quick approvals, and improved market access to Russia and the European Union (EU), owing to superior product quality and substantial processing capacities, will facilitate diversification of India’s shrimp industry.

Says Rahul Guha, Senior Director, Crisil Ratings, “Shrimp exports beyond the US have grown in double digits in the first 9 months this fiscal. To wit, volume is up 62 per cent to Vietnam, 43 per cent to the EU and in double digits to China. In value terms, growth in exports to these markets has been sharper, with higher tariffs and rupee depreciation translating into better realisations. Next fiscal, export revenue should rise 8-10 per cent , as benefits from announced trade deals with the US and the EU accrue. Geographical diversification and new customers and markets will also support the offtake.”

With limited capacity expansion plans, shrimp processors’ long-term debt additions will remain low. Though credit to new customers and geographies will be monitorable, working capital cycles for shrimp exporters are expected to remain stable. Moreover, with healthy cash generation and limited capex, the addition of debt, short term or long term, is likely to be limited.

Says Himank Sharma, Director, Crisil Ratings, “The credit profiles of shrimp processors should remain stable as demand from the US is expected to pick up from April 2026, once tariffs are lowered. Interest coverage of companies rated by us is expected at 5-5.5 times this fiscal and the next, vis-à-vis 4.8 times last fiscal, as profits improve marginally. Financial leverage3 is expected to remain healthy at ~0.7 time, similar to last fiscal.”

The evolving global economic situation, the tariff environment and volatility in foreign exchange rates will bear watching.