Laxmi Organics IPO – Details, Dates, Price Band and Review

Laxmi Organics IPO - Details, Dates, Price Band and ReviewLaxmi Organics IPO – Details, Dates, Price Band and Review

Mumbai based Laxmi Organic Industries IPO would open for subscription on 15th March, 2021. Laxmi Organics is a leading manufacturer of Acetyl Intermediates and Specialty Intermediates and good experience in large scale manufacturing of chemicals. Should you invest in Laxmi Organics IPO? In this article we would provide Laxmi Organic Industries IPO dates, IPO Price band, market lot, reasons to invest, risk factors, IPO Price valuations and final review whether one should invest or avoid.

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About Laxmi Organic Industries Limited

They are a leading manufacturer of Acetyl Intermediates and Specialty Intermediates with almost three decades of experience in large scale manufacturing of chemicals. They initially started manufacturing acetaldehyde and acetic acid in 1992, and soon thereafter moved on to manufacturing of ethyl acetate in 1996.

They are currently among the largest manufacturers of ethyl acetate in India with a market share of approximately 30% of the Indian ethyl acetate market. Further, post completion of the YCPL Acquisition, its market share in the ethyl acetate market will be further enhanced. They believe that the diversification of product portfolio into varied chemistries in Specialty Intermediates has enabled them to create a niche. They are the only manufacturer of diketene derivatives in India with a market share of approximately 55% of the Indian diketene derivatives market in terms of revenue

Its products are currently divided into two categories, namely the Acetyl Intermediates and the Specialty Intermediates.

The Acetyl Intermediates include ethyl acetate, acetaldehyde, fuel-grade ethanol and other proprietary solvents.

Specialty Intermediates comprises of ketene, diketene derivatives namely esters, acetic anhydride, amides, arylides and other chemicals.

Its products find application in various high-growth industries, including pharmaceuticals, agrochemicals, dyes & pigments, inks & coatings, paints, printing & packaging, flavours & fragrances, adhesives and other industrial applications.

Laxmi Organic Industries competitive strengths

1) Leading manufacturer of ethyl acetate in India.

2) Largest manufacturer of diketene derivative products.

3) Diversified customer base across industries.

4) Strategically located manufacturing facilities.

5) Consistent financial performance

Laxmi Organics IPO Dates, Price Band and Issue Details

IPO Opening Date 15-Mar-21
IPO Closing Date 17-Mar-21
Issue Type Book Built Issue IPO
Face Value Rs 2 per equity share
IPO Price band Rs 129 to Rs 130 per equity share
Market Lot 115 Shares
Min Order Quantity 115 Shares
Listing at BSE and NSE
Issue Size Total Rs 600 Crores
i) Fresh issue – 300 Crores
ii) OFS – 300 Crores

Note: Laxmi Organics IPO Price Band is now confirmed

Laxmi Organic Industries Limited IPO RHP

Objects of issue

Here are the objects of the IPO issue.

1) Investment in subsidiary firm, Yellowstone Fine Chemicals Private Limited (YFCPL) to partly finance the capex to establish a new manufacturing facility.

2) To invest in YFCPL for financing working capital requirements.

3) To finance the capex expansion of the SI manufacturing facility.

4) To finance business working capital requirements.

5) To purchase plant and machinery for infrastructure development at SI facility.

6) To make prepayment or repayment of borrowings availed by the company and subsidiary, Viva Lifesciences Pvt Ltd.

7) To meet general corporate purposes.

Who are the company promoters?

Yellow Stone Trust and Ravi Goenka are the promoters of the company.

Company Financial Performance

Here are the revenue and profit details in the last 3 years and 9 months.

For the year / Period ending Total Revenues (Rs in Millions) Profits after tax
(Rs in Millions)
Profit %
Mar-2018 13,960.7 756.9 5.4%
Mar-2019 15,743.2 723.9 4.6%
Mar-2020 15,386.2 702.1 4.6%
6 Months ending Sep-20 8,143.5 454.8 5.6%

Its EPS for FY2020 is Rs 2.86 and last 3 years average EPS is Rs 2.9.

Why to invest in this IPO?

Here are a few reasons to invest.

1) Laxmi Organic is a leading manufacturer of Acetyl Intermediates and Specialty Intermediates in India. They have over 30 years of experience of manufacturing of specialty chemicals.

2) Stable revenue and margin growth in the last 3 year and 6 months. However, its FY20 revenues and margins have declined marginally compared to FY19.

Risk Factors of investing in this IPO

1) The continuing impact of the outbreak of Covid-19 would have an impact on the business.

2) Large part of its manufacturing facilities are located in one area, i.e. Mahad, Maharastra. Any localized social unrest, natural disaster or breakdown of services in and around that area can have significant impact on company business.

3) The company is in the process of setting up a proposed manufacturing facility of fluorospeciality chemicals. This is a new product line, business and would depend on acceptance from customers. Such new business may or may not be profitable considering the investment it is making now.

4) If its research and development efforts do not succeed, it might not be able to improve its existing products or might not be able to introduce new products.

5) Any increase in the cost of raw materials or a shortfall in supply of raw materials might have an impact on company business.

6) A significant portion of its revenues, expenses and borrowings are in foreign currencies. They are exposed to foreign currency exchange risks which can impact the results of operations.

7) For complete internal and external risk factors, you can refer the RHP of the company.

Laxmi Organics IPO Dates / Time Table / IPO Schedule

Offer Open 15-Mar-21
Offer close 17-Mar-21
Finalization of Allotment 22-Mar-21
Initiation of Refunds 23-Mar-21
Credit to Demat Account 24-Mar-21
IPO Shares Listing Date 25-Mar-21

How to apply this IPO?

You can login to your demat account, visit IPO section and click on the IPO link of Laxmi Organic Industries Limited. You can then enter minimum lot quantity and price band and then submit.

IPO Price Valuations

Laxmi Organics IPO Price band is Rs 129 to Rs 130.

1) On the upper price band of Rs 130 and EPS of Rs 2.86 for FY20, the P/E ratio works out to be 45x.

2) For the last 3 years average EPS of Rs 2.9, the P/E ratio is 45x.

3) If we annualize its 6 months ending Sep-20 EPS for FY21, the P/E works out to be 32x.

4) Means, the company asking price of Rs 135 of the upper price band in the P/E range of 32x to 45x.

5) There are listed peers like Fine Organic Industries trading at P/E 35x (Highest) and Navin Fluorine at P/E 14.7x (Lowest) and the industry average is 21.7x. Hence Laxmi Organics share price of Rs 130 is aggressively priced.

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Laxmi Organics IPO GMP

Grey Market Price (GMP) of this IPO would be updated soon.

Laxmi Organics IPO Review – Should you invest?

Laxmi Organics is a leading manufacturer of Acetyl Intermediates and Specialty Intermediates and has good experience in large scale manufacturing of chemicals.

Laxmi Organics posted stable revenue and profit growth in the last 3 years and 6 months.

Laxmi Organics IPO price is fully priced.

High Risk investors can invest in this IPO for medium to long term perspective.

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Suresh KP

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