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Laxmi organic IPO: What Do Experts Think About The Offer?

05 August 20224 mins read by Angel One
Laxmi organic IPO: What Do Experts Think About The Offer?
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Laxmi Organic IPO will float into the market on March 15, 2021, as the twelfth IPO of the year. The issuer will launch a reduced offer of Rs 600 crores after it mopped up Rs 200 crores in a pre-IPO placement of equities. The issue containing Rs 300 crore each of fresh and OFS shares will launch in the price band of Rs 129-130.

Considering that the company is a leading player in the acetyl intermediates and specialty intermediates segment for the last three decades, the offer will surely attract enthusiastic investors.  If you are interested in Laxmi Organic IPO, read our company and industry analysis here before investing.

Overview Of Global and The Indian Specialty Chemical Market

The current market valuation of the global chemical market stands at USD 4738 billion or Rs 345.8 lakh crore, of which, specialty chemical contributes USD 798 billion. The chemical sector is projected to grow between 7-8 percent from 2019-24 in the Asian market. China holds the leading position with 37 percent market share, followed by the European Union (17 percent) and the US (14 percent). India’s contribution is merely 3.5 percent in the global market. It suggests that the Indian segment has the potential to register strong growth in the future.  With the current valuation of USD 166 billion, the Indian specialty chemical market is expected to reach USD 133 billion by 2024 at a CAGR of 11-12 percent.  The China +1 policy is further going to boost India’s position in the global arena.

Laxmi Organic is the largest ethyl acetate producer in India, with an approximate market share of 30 percent. It is also the only manufacturer of diketene derivatives in India, occupying 55 percent of the Indian market in terms of revenue. The company has a global footprint, exporting to over thirty countries, including China, the EU, Russia, The US, UK, and the United Arab Emirates.

Company Strength

  • Well-diverse portfolio in two distinct categories of acetyl intermediate and specialty intermediates
  • The company enjoys long-term commercial relationships with some of the top MNCs and exports to over 30 counties, which means there is no single geographic dependency for business and revenue
  • It has two advanced manufacturing units in Maharastra and in the process of building a Fluro chemical unit with the proceed from the IPO

In Terms Of Profit And Revenue, Laxmi Organic Managed To Grow Year-On-Year

Between FY18 to FY20, the company’s revenue grew from Rs 139.6 crores to Rs 153.8 crores. In the H1 of FY21 till September 2020, its recorded revenue was Rs 81 crores.

 Laxmi Organic IPO: Should You Subscribe?

Laxmi Organic IPO priced at Rs 129-130 is attractively priced for general investors. The minimum lot size comprising 115 shares will require general investors to invest Rs 14,950. Given the company’s track record and financials, long-term investors may like to subscribe to the offer.

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