The IPO of Laxmi Organic was subscribed 6.05 times on the second day of the bidding process on Tuesday. The issue is priced in the range of Rs 129-130 per share and will close on March 17.
Commenting on the IPO, Prashanth Tapse, AVP Research Head, Mehta Equities said, "We believe Laxmi Organic IPO offer gives investors a unique investment opportunity in high knowledge intensive specialty chemicals manufacturer and leading exporter of ethyl acetate product with ~30% market share."
"We are also very optimistic about the sector as increasing demand in Pharma and agrochemicals from developing economies like India, is likely to increase the consumption of diketene and its derivatives, wherein Laxmi Organic has a very strong presence under Specialty Intermediates portfolio and it is the only Indian manufacturer of diketene derivatives with ~55% market share. We also assume that the sector will also attract multiyear export opportunities in the current "Made in India & Make for World" an initiative by the Indian Govt which will add impetus to the emergence of India as a future manufacturing hub for the specialty chemicals industry for the world," he added.
"Considering its well-diversified presence in pharmaceuticals, Agrochemicals & Colour pigments segments and long-standing relationships with marquee customers with a global presence Laxmi Organic is well placed to tap the sector growth with low competition because of high entry barriers due to complex chemistries business nature," Tapse said.
"On valuations parse at upper price band (Rs 130), the issue is asking for a market cap of Rs 34,280 million with price earnings ratio at 32x FY21E earnings annualized vs. industry average P/E at ~30x which seems IPO offer is fairly priced compared to its peers while higher export potential and leading producer of ethyl acetate & diketene derivatives justifies higher premium for listing gain. Considering all the above factors we recommend investors to "Subscribe For Listing Gain Only," he stated.
Laxmi Organic Industries (Laxmi Organic) is a leading manufacturer of Acetyl Intermediates and Specialty Intermediates with almost 3 decades of experience in large scale manufacturing of chemicals. It has diversified product portfolio in various high growth industries, including pharma, agrochem, paints & coatings, printing, packaging, dyes & pigments. With this it is also currently amongst the largest manufacturers of ethyl acetate in India with a market share of approximately 30% of the Indian ethyl acetate market. They have been the largest exporter of ethyl acetate from India in the 6 months ended September 30, 2020 and Fiscals 2020, 2019 and 2018 and one of the largest exporters of ethyl acetate to Europe from India since 2012. Laxmi Organic has wide global footprint with customers in over 30 countries.
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