Prabhudas Lilladher's research report on Laxmi Organic Industries
We upgrade the rating to ‘Hold’ as the stock has corrected significantly along with increased visibility on projects, which will fuel future growth. Laxmi Organic Industries (LXCHEM) reported a topline of Rs7.8bn, up 13.4% YoY and 2% QoQ, driven by 17% volume growth across both its segments. Specialty segment continues to outperform and now constitutes 70% of the overall EBITDA. We expect this share to improve further going ahead. However, the Essentials segment, which constitutes 68% of revenue, saw a degrowth in revenue sequentially. EBITDAM for this segment also decreased by 80bps sequentially due to higher acetic acid prices. The management expects the fluorochemical segment to contribute to 10% of the Rs2bn peak revenue in FY25, and to reach a peak by FY27. The company plans to invest Rs11bn and double its revenue by FY28. Agrochem side of the company continues to remain soft, while other sub-segments like pharma, printing & packaging as well as colors and pigments have seen stable demand.
Outlook
The stock currently trades at 32x FY27 EPS. Using SOTP, we value it at Rs237. Upgrade to ‘Hold’ rating.
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