Lakshmi Overseas has registered a turnover of Rs 560 crore for FY06, which is a growth of 37% yoy, reflecting the full benefit of capacity additions as well as increased realisations. Revenue for the fourth quarter was up by 10% yoy to Rs 150 crore.Due to higher volumes and realisations, the operating margin has improved considerably from 8% in FY05 to 14% in FY06.Similarly, for Q4FY06, the company recorded an impressive 20.4% operating margin compared to 10% in the same period last year.Net profit has grown significantly to Rs 55.70 crore in FY06 registering a growth of 209% yoy. Q4FY06 net profit is at Rs 21.06 crore with a stupendous growth of 191% yoy.Considering the positive effects of value additions to the rice processing business in the form of enhanced revenues (refined oil and starch sales) and a reduction in operating costs (lowered transportation cost), the BRICS PCG has put a buy recommendation on the stock.At the current price of Rs 985 the stock is quoting at 11.5x and 6.8x its FY07E and FY08E expected earnings of Rs 86 and Rs 145 respectively.At the target price of Rs 1315 the stock would quote at 15.3x and 9x its FY07E and FY08E earnings respectively.
