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Saturday, May 30, 2009

Lakshmi Energy & Foods:-Is it a buy or a sell?

Scripscan:Lakshmi Energy & Foods ltd(Lakshmi Overseas Industries Ltd)
Traded in:Nse-bse

Story:LEAF is a leading non-basmati rice processor. It completed its expansion recently, which involved setting up a 30-mw husk-based power plant and raising rice milling capacity to 1.35 mt from 0.97 mt. It has set up wheat flour capacity of 100 tonnes per day. LEAF derives 85% of its revenue from rice processing and 15% from bran oil, de-oiled cake and branded rice. It sells 75% of its rice output to FCI at a margin of Re 1/kg. The balance is sold at higher margins in the open market. It has ventured into branded foods under the name ''Lakshmi Foods'' via its subsidiary, Punjab Greenfield Resources.The company''s operational power plans is now eligible for carbon credits. Around 85% of its total power will be sold to the state government. LEAF''s diversification into wheat processing is likely to generate annual profit of Rs 15 crore from the current fiscal. Wheat processing capacity will be increased to 300 tonnes per day by end FY09. LEAF has planned investments worth Rs 800 crore over the next four years. Its rice milling capacity will rise by 50%; capacities for downstream products like bran oil extraction and refining will also be expanded. Its power plant capacity will be hiked to 105 mw by ''11. The branded foods segment may drive LEAF''s future growth. With rising retail sales, it aims to reduce the share of FCI sales to 50% by FY10.Considering the benefits of expansion projects, power plant, carbon credits, wheat processing unit and LEAF''s rising focus on retail sales, The companys prospects looks very attractive.A great buy at dips.

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