Laxmi Organic Industries IPO: Issue Date, Price, Reviews, Outlook & more Swastika
IPO, SME IPO, IPO in India Laxmi Organics IPO

LAXMI ORGANIC | Laxmi Organic Industries Ltd IPO

Laxmi Organic is a leading manufacturer of Acetyl Intermediates and Specialty Intermediates with almost three decades of experience in the large scale manufacturing of chemicals. Since its inception in 1989, it has been on a journey of transformation.

It initially started manufacturing acetaldehyde and acetic acid in 1992, and soon thereafter moved on to manufacturing ethyl acetate in 1996. It is currently among the largest manufacturers of ethyl acetate in India with a market share of approximately 30% of the Indian ethyl acetate market.

Laxmi Organic is 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 in Fiscal 2020 and one of the largest portfolios of diketene products. Its products are currently divided into two broad categories, namely the Acetyl Intermediates and the Specialty Intermediates.

Alembic Pharmaceuticals Limited, Laurus Labs Limited, Granules India Limited, Hetero Labs Limited, Heubach Colour Private Limited, Hubergroup India Private Limited, Huhtamaki India Limited, Macleods Pharmaceuticals Private Limited, Suven Pharmaceuticals Limited, Colourtex Industries Private Limited, and UPL Limited are some of its customers.

The company has a global footprint with customers in 30 countries including but not restricted to China, Russia, Singapore, UAE, UK, USA, Netherland, etc. Currently, it has 2 manufacturing facilities in Mahad, Maharashtra for the manufacturing of AI and SI products. It is also proposing to set-up a new manufacturing facility at Lote Parshuram, Maharashtra to manufacture four speciality chemicals.

Product Portfolio:

The products currently manufactured by us are divided into two categories, namely the Acetyl Intermediates and the Specialty Intermediates.

Acetyl Intermediates:

The Acetyl Intermediates find application in inter alia the pharmaceuticals, agrochemicals, inks and paints, coatings, printing, packaging and adhesives industries. Ethyl acetate is used in multiple industries as a solvent.

Speciality Intermediates:

Specialty Intermediates comprise more than 34 products which include ketene, diketene derivatives namely esters, acetic anhydride, amides, arylides and other chemicals. Speciality Intermediates find application in inter alia the pharmaceuticals, agrochemicals, dyes and pigments.

Strength of the company

  • Leading manufacturer of ethyl acetate in India.
  • The largest manufacturer of diketene derivative products.
  • Diversified customer base across industries.
  • Strategically located manufacturing facilities.
  • Consistent financial performance.

RISKS RELATING TO BUSINESS

  • Any failure to commercialize new products may adversely impact a company’s business.
  • Any shortfall in the supply of our raw materials have an adverse effect on business
  • Company is exposed to foreign currency exchange risks which may adversely impact the results of operations
  • Any significant fall in global prices of products may have an adverse effect on business
  • Disruptions of logistics could adversely affect our business and the results of operations.

IPO Details:

IPO Date March 15th, 2021 to March 17th, 2021
Issue Type Book Built Issue IPO
Issue Size 45153846Eq Shares of ₹2
(aggregating up to ₹600.00 Cr)
Fresh Issue 23076923 Eq Shares of ₹2
(aggregating up to ₹300.00 Cr)
Offer for Sale 23076923 Eq Shares of ₹2
(aggregating up to ₹300.00 Cr)
Face Value Rs.2 per equity share
IPO Price Rs.129 to Rs.130 equity share
Min Order Quantity 115
Listing At BSE, NSE

IPO Objective:

The company purposes to utilize funds towards the following objectives:

  • Investment in Yellowstone Fine Chemicals Private Limited (“YFCPL”)for funding its working capital requirements
  • Funding capital expenditure requirements for expansion of its SI Manufacturing Facility
  • Funding working capital requirements of the Company
  • Purchase of plant and machinery for augmenting infrastructure development at its SI Manufacturing Facility
  • Prepayment or repayment of all or a portion of certain outstanding borrowings availed by the Company & its wholly-owned Subsidiary, Viva Lifesciences Private Limited

Financial Performance:

Laxmi Organic’s financial performance (in INR crore)
FY2018 FY2019 FY2020 H1 FY2021
Revenue 1,396.1 1,574.3 1,538.6 814.4
Expenses 1,282.8 1,476.3 1,483.5 758.2
Net income 76.0 72.3 69.7 45.6
Net margin (%) 5.4 4.6 4.5 5.6

Tentative Time Table:

IPO Opens on 15 March 2021

IPO Closes on 17 March 2021

Basis of Allotment Date: Mar 22, 2021

Initiation of Refunds: Mar 23, 2021

A credit of Shares to Demat Account: Mar 24, 2021

IPO Listing Date: Mar 25, 2021

Outlook :

Incorporated in 1989, Laxmi Organic Industries Ltd is a speciality chemical manufacturer that operates in 2 business segments; Acetyl Intermediates (AI) and Specialty Intermediates (SI)

According to the Frost & Sullivan Report, given its expertise in the Acetyl Intermediates and the Specialty Intermediates segments, its entry into the fluorochemicals space will put it in a differentiated position from other chemicals manufacturers.

Laxmi Organic has been the largest exporter of ethyl acetate from India in the six 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.

For the six months ended September 30, 2020, and the Fiscals 2020, 2019 and 2018, its Company’s revenue from exports of manufactured products contributed 23.17%, 24.24%, 27.80% and 22.18%, respectively, of its revenue from operations on a standalone basis

The company has stable revenue growth over the last three years though the company has not grown significantly over the same period while we can see a decline in net profits too. The margins of the company have been stable varying between 4%-6%.

At the upper price band of Rs. 130 and EPS of Rs. 2.86 the PE works out to be 37.68 which is higher than the industry average of 21.70. However, their entry into a high margin business of speciality fluorochemicals though the IPO justifies the higher PE.

Eyeing the growth of the intermediaries industry and its growth globally we may expect the company to do well in the upcoming years. Laxmi Organic was the largest exporter of ethyl acetate from India in the six months ending September 2020. We may expect the company to do much better with the new acquisition.

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