Specialty chemical company Laxmi Organic Industries share price rallied as much as 34 percent on the listing day on March 25 despite weakness in the market.
The listing premium was in line with the healthy response to the initial public offering and with the strong business fundamentals of the company, experts said. They advised booking profits, though the long term trend is strong and bullish.
"We recommend allotted investors to book healthy profits on listing day and if non-allotted investors wish to buy on a listing day, it is better to wait and watch to accumulate in a better pricing range," Prashanth Tapse, AVP Research at Mehta Equities told Moneycontrol.
The stock touched an intraday high of Rs 174.50 and a low of Rs 143 after opening the trading day at Rs 156.20, a 20 percent premium over the issue price on the BSE. The share was trading at Rs 168.65, up 29.73 percent, with a market capitalisation of Rs 4,457.22 crore, at the time of publishing this copy.
Laxmi Organic Industries is a leading manufacturer of acetyl intermediates and specialty intermediates, with almost three decades of experience in large-scale manufacturing of chemicals with customers in over 30 countries. The company has a well-diversified presence in pharmaceuticals and agrochemicals segments and is a leading exporter of ethyl acetate with around 30 percent market share, experts said.
Tapse is optimistic about the sector as increasing demand in pharma and agrochemicals from developing economies like India will likely increase the consumption of diketene and its derivatives, in which the company has a very strong presence. It is the only Indian manufacturer of diketene derivatives, with around 55 percent market share.
"We also assume that the sector will also attract multi-year export opportunities in the current 'Made in India & Make for World' initiative by the Indian government which will add impetus to the emergence of India as a future manufacturing hub for the specialty chemicals industry for the world," he said.
Laxmi Organic Industries is a leading manufacturer of acetyl intermediates and specialty intermediates, with almost three decades of experience in large-scale manufacturing of chemicals with customers in over 30 countries.
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In view of the volatility in the market, Astha Jain, Senior Research Analyst at Hem Securities, also recommended booking profit on 75 percent allotment and holding the remaining shares.
"Due to differentiated business model, asset base, product mix and experience in handling complex chemistries create high entry barriers, the company is looking strong in the long term," she said.
Laxmi Organic Industries mopped up Rs 600 crore through the public offer, including a fresh issue of Rs 300 crore that will be utilised for working capital requirements, setting up fluorospecialty chemicals facility and expansion of specialty intermediates manufacturing facility.
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