DFM Foods Ltd:Future growth outlook and prospects,buy/sell/hold

Scripscan:DFM Foods Ltd
cmp:40
Code:519588

Story:DFM Foods Limited manufactures extruded snack food products in India. It also engages in trading and storage of wheat. The company is based in Delhi, India.Record agricultural production, the global meltdown in commodity prices and Government action to control inflation at any cost during an election year, contributed to the development of extremely bearish conditions in the wheat market.Consequently, the business division resulted in losses for the company. Given the current macro supply and demand factors and uncertainty in the direction of Government policy, the company has decided not to store any wheat during the current year. However, the possibility of developing the wheat supply chain by buying directly from the farmers for onward supply to actual consumers is being explored.The sales and profitability of Snack Foods division grew handsomely during the last fiscal. In order to cater to increasing demand, an expansion of extrusion capacity has been undertaken at a capital cost of approximately Rs. 13 crores. The new capacity is likely to be commissioned in a few days time.Am quite bullish on the food processing store and who knows maybe in the new bull run the sector itself would emerge as a theme.I rate a hold on dfm foods at present levels.