Started in 1989, Laxmi Organics Industries Limited is a leading manufacturer of Acetyl Intermediates and Specialty Intermediates with almost three decades of experience in large scale manufacturing of chemicals. The company's products are currently divided into two broad categories, namely the Acetyl Intermediates and the Specialty Intermediates. The Acetyl Intermediates include ethyl acetate, acetaldehyde, fuel-grade ethanol and other proprietary solvents, while the Specialty Intermediates comprises of ketene, diketene derivatives namely esters, acetic anhydride, amides, arylides and other chemicals. Company's 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. The company also propose to diversify into manufacturing of specialty fluoro chemicals to which end, Company have recently acquired assets including plant & machinery, design and operating paperwork, REACH registrations and patents of Miteni, a manufacturer of organic fluoro specialties and electrochemical fluorination. Over the years, company has significantly expanded its scale of operations and global footprint with customers in over 30 countries including China, Netherlands, Russia, Singapore, United Arab Emirates, United Kingdom and United States of America. The company has established long-standing relationships with marquee players including Syngenta Asia Pacific Pvt. Ltd., Alembic Pharmaceuticals Limited, Covestro (India) Private Limited, Dr. Reddy’s Laboratories Limited, Flint Group India Private Limited, Granules India Limited, Hetero Labs Limited, Heubach Colour Private Limited, Hubergroup India Private Limited, Huhtamaki India Limited, Laurus Labs Limited, Macleods Pharmaceuticals Private Limited, Mylan Laboratories Limited, Neuland Laboratories Limited, Parikh Packaging Private Limited, Suven Pharmaceuticals Limited, Colourtex Industries Private Limited, and UPL Limited. The company has offices in Leiden (Netherlands), Shanghai (China) and Sharjah (United Arab Emirates) which enables company to assess international demand and increase company's customer outreach thereby bolstering company's product development initiatives. The company also has arrangements with third parties for usage of storage tanks in inter alia Mumbai for storage of raw materials and finished goods and Rotterdam (Netherlands), Antwerp (Belgium) and Genoa (Italy) for storage of finished products which enables company to deliver company's products on short notice. As per financial performance, Laxmi Organics has posted total income/net profits of Rs. 1,396.07 cr. / Rs. 76.00 cr. (FY18), Rs. 1,574.32 cr. / Rs. 72.29 cr. (FY19) and Rs 1,538.62 cr / Rs 69.68 cr (FY20). For upto H1 of FY21, company has posted profit of Rs 45.58 Cr on total revenue of Rs 814.35 Cr. So company has shown average performance. Company has posted an average EPS of Rs. 2.29 and average RoNW of 16.94% for last three fiscals. Issue is priced at a P/BV of 6.19 as per NAV of 20.99 on 30.09.20. As per FY20 earnings, P/E is around 49. If we attribute latest annualised earnings of FY21 on fully diluted equity post issue, then asking price is at a P/E of around 38. As per RHP, the listed peers are shown in above table. On BRLM's front, two BRLMs are associated with this IPO, and have handled around 12 IPOs in last three fiscals, and from last 10 IPOs, 4 opened below issue price and remaining opened above issue price on the day of listing. As of now, from last 10 IPOs, 3 are trading below price and remaining are trading above issue price. ( As on 06.03.2021 ) As per financials, results are average, RoNW is 16.94% for last three fiscals and issue looks fully priced with respect to current earnings. This industry of Speciality Chemicals is growing at good rate, and expected to grow at good rate for next 3-5 years. Performance of BRLMs are average. So we give SUBSCRIBE rating to this IPO for listing gains.
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