Lakshmi Energy & Foods - Ready to energise
Lakshmi Energy & Foods Limited (LEAF) is the largest manufacturer of non-basmati rice in India. This North-India based fully integrated company has an outstanding track record with its revenues growing at 41% CAGR & profits at a rocketing 164% CAGR over FY03-08 period; this growth primarily being led by increasing expansion & increasing integration (ergo, increasing margins). Going ahead we see LEAF maintaining its accelerating pace of growth as it progresses with its ambitious expansion plans while maintaining integration. Forward integration into packaged & branded goods and investments in biomass energy add flavour to LEAF`s strategy to cash in from the present & somewhat sustainable agri-boom.
Founded in 1982 by its CMD Mr. Balbir Singh Uppal, LEAF is one of the leading non-basmati rice producers in the world with a current capacity of processing 3 Million Metric Tonnes (MMT) per annum of paddy. LEAF is undisputed leader in paddy production worldwide. LEAF already has the largest integrated processing plant for paddy in the world.
LEAF is located in the paddy-growing region of Punja, situated at 45 km from Chandigarh and 50 km from Ludhiana. Punjab despite primarily a wheat consuming state, is also a key producer of rice with the highest yield per hectare, on account of its edge in terms of climate, soil quality & irrigation facilities. Lakshmi is a key supplier of rice to Food Corporation of India (FCI) for its Public Distribution System (PDS) and is located in close proximity to FCI warehouses (1 km) and railway yards.
LEAF has come a long way from rice trading & refining of raw rice to became an integrated player operating from sourcing paddy to manufacturing finished rice with solvent extraction & refinery capacities in place for its by-products.
Now looking at the company financials we notice that company has achieved a turnover of more than 1070crores in last 4 quarter which is highest turnover ever achieved. It has made a net profit of 110 crores which is healthy more than 10% net profit margin. It converts to EPS of 17.4 and P/E of less than 4.5 discounting at current market price of Rs78. There is huge institutional holding of 39% and public holding is just over 6%. The company is standing at a comfortable Debt/Equity ratio of 0.97.
Seeing its strong net profit margins and diversification into energy segment we may give it a reasonable P/E multiple of 8-9. So its fair value comes to 140-156. Still I am reducing the target by 20% to Rs112 seeing the bleak economic scenerio. It still holds potential return of more than 43% from current levels of 78. We may expect this price within a month time. Since the market has run up quite a bit and there is possibility of bad news coming globally or domestically, so I recommend a stop loss of 69 in the stock.
Anurag Dujari
Mobile: 92308-92309
E-Mail- anurag130@gmail.com
Yahoo Messenger ID - trading_picks
Disclaimer and Terms of Use: Stock market is subject to risk. High risk high gain is the key to stock market. We are not responsible for any loss or profit associated with stocks mentioned on this site/ by us. Under no circumstances will we be held liable for losses incurred due to information presented anywhere on the site or given through yahoo messenger or SMS. Please do your own research before establishing an equity/ derivatives position in a company. Not all stocks recommended by us are suitable for your investment needs. Carefully evaluate your own risk appetite. Any error in this document cannot be claimed by anyone. The articles on this site are not written by a registered investment advisor. The author may or may not be holding a position in companies that are being analyzed. More likely than not, the author will have an interest in the stock mentioned....
Founded in 1982 by its CMD Mr. Balbir Singh Uppal, LEAF is one of the leading non-basmati rice producers in the world with a current capacity of processing 3 Million Metric Tonnes (MMT) per annum of paddy. LEAF is undisputed leader in paddy production worldwide. LEAF already has the largest integrated processing plant for paddy in the world.
LEAF is located in the paddy-growing region of Punja, situated at 45 km from Chandigarh and 50 km from Ludhiana. Punjab despite primarily a wheat consuming state, is also a key producer of rice with the highest yield per hectare, on account of its edge in terms of climate, soil quality & irrigation facilities. Lakshmi is a key supplier of rice to Food Corporation of India (FCI) for its Public Distribution System (PDS) and is located in close proximity to FCI warehouses (1 km) and railway yards.
LEAF has come a long way from rice trading & refining of raw rice to became an integrated player operating from sourcing paddy to manufacturing finished rice with solvent extraction & refinery capacities in place for its by-products.
Now looking at the company financials we notice that company has achieved a turnover of more than 1070crores in last 4 quarter which is highest turnover ever achieved. It has made a net profit of 110 crores which is healthy more than 10% net profit margin. It converts to EPS of 17.4 and P/E of less than 4.5 discounting at current market price of Rs78. There is huge institutional holding of 39% and public holding is just over 6%. The company is standing at a comfortable Debt/Equity ratio of 0.97.
Seeing its strong net profit margins and diversification into energy segment we may give it a reasonable P/E multiple of 8-9. So its fair value comes to 140-156. Still I am reducing the target by 20% to Rs112 seeing the bleak economic scenerio. It still holds potential return of more than 43% from current levels of 78. We may expect this price within a month time. Since the market has run up quite a bit and there is possibility of bad news coming globally or domestically, so I recommend a stop loss of 69 in the stock.
Anurag Dujari
Mobile: 92308-92309
E-Mail- anurag130@gmail.com
Yahoo Messenger ID - trading_picks
Disclaimer and Terms of Use: Stock market is subject to risk. High risk high gain is the key to stock market. We are not responsible for any loss or profit associated with stocks mentioned on this site/ by us. Under no circumstances will we be held liable for losses incurred due to information presented anywhere on the site or given through yahoo messenger or SMS. Please do your own research before establishing an equity/ derivatives position in a company. Not all stocks recommended by us are suitable for your investment needs. Carefully evaluate your own risk appetite. Any error in this document cannot be claimed by anyone. The articles on this site are not written by a registered investment advisor. The author may or may not be holding a position in companies that are being analyzed. More likely than not, the author will have an interest in the stock mentioned....
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