Laxmi Organic IPO comprises of a fresh issuance of equity shares worth Rs 300 crore and an offer for sale worth Rs 300 crore by the promoter Yellow Stone Trust. Laxmi Organic Industries Ltd. the Mumbai based specialty chemicals manufacturer had last month, raised ₹200 crore through a pre-IPO placement of 15.50 crore shares, following which the size of the fresh issue has been reduced to ₹300 crore from the earlier proposed ₹500 crore.
Laxmi Organic IPO Details:
|Issue Opens||Monday, 15th March, 2021*|
|Issue Closes||Wednesday, 17th March, 2021|
|Issue Details||Fresh Issue of Equity Shares upto ₹ 300 Cr|
|+ OFS upto 300 Cr|
|Face Value||₹ 2 Per Share|
|Issue Size (₹ Cr)||₹ 600 Cr|
|Price Band||₹ 129 – 130|
|Bid Lot||115 shares|
|Issue Structure :|
|QIB||50% of the offer|
|NIB||15% of the offer|
|Retail||35% of offer( ~16,153,847Shares, ₹210 Cr)|
|Applications for 1x Retail||140468|
|BRLMs||Axis Capital, DAM Capital|
|Registrar||Link Intime India Pvt. Ltd.|
Updates & Indicative Time Table:
- ANCHOR ISSUE: IPO bound Laxmi Organic Industries Ltd., raised ₹180 crore from 15 anchor investors a day prior to the opening of its IPO. Eight foreign portfolio investors were allocated 78.46 lakh shares for about ₹102 crore. The names include Nomura India Equity Fund, Abu Dhabi Investment Authority, Goldman Sachs, Kuber India (Plutus), Theleme India Master Fund, Malabar India Fund, Ashoka India Opportunities Fund, India Acorn Fund. Further amongst the domestic investors, SBI Mutual Fund, ICICI Prudential Mutual Fund and Aditya Birla Mutual Fund picked up 10.77 lakh shares (7.78 %) for ~ ₹14 crore each, while Kotak Mutual Fund, SBI Life Insurance, HDFC Life, DSP Mutual Fund were allotted shares worth ₹9 crore each.
- The Indicative Timetable for the Laxmi Organic IPO:
- Finalization of Basis of Allotment 22nd March 20211
- Refunds/Unblocking ASBA Fund 23rd March 2021
- Credit of equity shares to DP A/c 24th March 2021
- Trading commences : 25th March 2021
About Laxmi Organic
- Laxmi Organic was incorporated in 1989 based in Maharashtra.
- The promoters of this company are Yellow Stone Trust and Ravi Goenka.
- The company is manufacturer of specialty chemical. They are operating 2 business segments
- 1.Acetyl Intermediates (AI) and
- 2.Speciality Intermediates (SI).
- They are one of the leading manufacturer of ethyl acetate with 30% of market share and only manufacturer of diketene derivatives in India.
- Laxmi Organics has been exporting their products to 30 countries like China, Russia, Singapore, UAE, UK, USA, Netherland, etc. besides catering to many Indian Pharma, agrochemicals, printing and packaging companies. T
- The company has its 2 manufacturing facilities at Mahad, Maharashtra with one facility dedicated to Acetyl Intermediates (the “AI Manufacturing Facility”) and another dedicated to Specialty Intermediates (the “SI Manufacturing Facility”), which are strategically located in proximity to several ports and each other.
- The company has two Department of Scientific and Industrial Research, Government of India (“DSIR”) recognised research and development facilities, with state-of-the-art research and development infrastructure to synthesise specialty molecules and advanced intermediates.
- Laxmi claims to be on lookout for customer-specific and market-driven emerging chemistries. With deep technical knowledge in the fundamental principles of chemistry and a track record of delivering quality solutions to global clients, Laxmi is positioned to adopt emerging chemistries.
- The company has recently acquired Miteni SPA’s organic fluorospecialties and electrochemical fluorination assets with a view to foray into the fluorospecialty chemical business.
Laxmi Organic IPO: Financials
|Particulars/ Rs. In Cr.||6mFY21||FY20||FY19||FY18|
|Revenue from Operations||813.41||1,534.12||1,568.52||1,393.07|
|Revenue Growth (%)||–||-2.19%||12.59%||–|
|Profit Before Tax||56.2||80.8||97.59||113.31|
|Net Profit (%)||5.59%||4.56%||4.60%||5.42%|
|Equity Share Capital||45.02||45.02#||50.05||10.01|
|Net worth as stated||471.45||425.96||448.89||378.37|
|Net Asset Value (₹ )||20.99||18.97||17.98||15.16~|
|Asset Turnover Ratio||0.77||1.47||1.64||1.82|
|Working Capital Turnover Ratio||5.85||10.86||11.34||14.53|
|EPS (₹ )||2.02||2.86||2.89||3.03|
|Equity Post IPO||49.64|
|EPS (Post IPO) FY20||2.83|
|EPS annualized on H1FY21||3.67|
|PE (based on ann H1FY21)||35.47|
|Market Cap / Sales||2.1|
- Laxmi Organic Industries Ltd is a leading manufacturer of ethyl acetate in India.
- Largest manufacturer of diketene derivative products.
- Diversified customer base across industries.
- Strategically located manufacturing facilities.
- Consistent financial performance.
- Laxmi Organic Industries Ltd. has part of its manufacturing facilities located in one area only at Mahad, Maharastra.
- Any localized social unrest, natural disaster or breakdown of services in and around that area can have significant impact on company business.
- Increase in the cost of raw materials or shortfall might have an impact on company business.
- Supply and prices of its key products has seen significant ups and downs in the past.
Laxmi Organic IPO: Assessment
- As per the Frost & Sullivan, Laxmi Organic is currently among the largest manufacturers of ethyl acetate in India with a market share of ~30%.
- Laxmi Organic is the only manufacturer of Diketene derivatives in the country with a market share of ~55% of the Indian diketene derivatives market and has wide portfolio of diketene products.
- Laxmi Organic Industries Ltd. products cater to some of the high growth industries such as pharmaceuticals, agrochemicals, dyes & pigments, inks & coatings, paints, printing & packaging, adhesives etc.
- Laxmi Organic was country’s largest exporter of ethyl acetate in fiscal FY20. It has been one of the top exporters of ethyl acetate to European Bloc since 2012.
- Laxmi Organic Limited aims to establish itself as a leader in specialty intermediates and become the growth partner of choice to global Life Sciences, Crop Sciences and Pigments companies.
- It plans to add downstream and value-added products to its product portfolio. The company is in the process of setting up the proposed facility in Lote Parshuram, Maharashtra for manufacturing fluorospecialty chemicals which is proposed to commence operations by the end of Fiscal 2022
- The company has shown Aarti Industries, Atul Ltd., Fine Organic, Navin Fluorine, Rossari Bio and SRF as its listed peers.
|Company/Ratio||CMP/IPO Pr. (Rs.)||Sales (Cr.)||PE|
- The company has established long standing relationships with marquee customers like Syngenta Asia Pacific Pte. Ltd., Alembic Pharmaceuticals Limited, Covestro (India), Sudarshan Chemicals, Dr. Reddy’s Labs, Flint Group India, Granules India, Hetero Labs Limited, Heubach Colour, Hubergroup India, Huhtamaki India, Laurus Labs, Macleods Pharmaceuticals, Mylan Labs, Neuland Labs, Parikh Packaging, Suven Pharmaceuticals, Colourtex Industries, UPL Limited etc.
- In 2012, International Finance Corporation (IFC) invested Rs 47.5 crore for a 10.05% stake at an enterprise valuation of $105 million. The company bought back this stake in January 2020 for Rs 82 crore.
- The Company, undertook Pre-IPO Placement placement of 15,503,875 Equity Shares aggregating to Rs. 200 crorelast month. Due to this the size of fresh issue of shares has been reduced from Rs. 500 crore to up to Rs. 300 crore in the IPO. This Pre-IPO placement was done at Rs. 129. Malabar India Fund and Ashok India Opportunities Fund which have now participated in the anchor portion of the IPO has also invested ₹55 crore and ₹35 crore, respectively in this Pre-IPO round last month.
- Laxmi Organic IPO was last reported to be commanding a GMP of Rs. around Rs. 80.
- Laxmi Organic IPO is demanding a P/E multiple of 36x based on annualized FY21 results.
- I intend to apply in Laxmi Organic IPO. The Laxmi Organic IPO looks to be in the middle , i.e. not very aggressive priced like the another IPOs which has just preceded it. I am positive on the stock as It seems to have a reasonable track record, global footprints in over 30 countries besides quite impressive clientele.
Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . Also Certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.