Reduce Laxmi Organic Industries; target of Rs 179: Prabhudas Lilladher

Prabhudas Lilladher recommended reduce rating on Laxmi Organic Industries with a target price of Rs 179 in its research report dated July 29, 2025.

Broker Research

July 30, 2025 / 13:42 IST

Reduce

26 Aug, 2025 12:21

Volume

Todays L/H

Prabhudas Lilladher's research report on Laxmi Organic Industries

Laxmi Organic Industries (LXCHEM) reported Q1FY26 revenue of Rs6.9bn, marking a decline both YoY and sequentially. Revenue decline of 3.5% YoY is despite 8% YoY volume growth. Essential Chemicals segment, which accounts for ~70% of overall revenue, posted modest topline growth of 4%. However, gross margins for the segment declined by 400bps YoY and 100bps QoQ, impacted by falling prices of key raw material acetic acid, which compressed spreads in ethyl acetate (constitutes 80–85% of essentials basket). Specialty Chemicals segment saw 18% YoY decline in revenue, due to the phasing out of a product contributing ~9% to the portfolio, and deferment of a few product deliveries to H2FY26. Replacement for the phased-out product is expected by Q4FY26, indicating continued pressure on specialty revenue in Q2FY26. Fluorochemicals segment is in the ramp-up phase, with the management guiding for 40–60% of its Rs2bn peak revenue potential to be achieved in FY26, and full-scale ramp-up expected by FY27. The company has announced a Rs11bn capex plan, aimed at doubling revenue by FY28. On the demand front, the Agrochemicals segment remains soft, while sub-segments such as pharmaceuticals, printing & packaging, and colors & pigments continue to exhibit stable demand trends.

Outlook

The stock currently trades at 33x FY27E EPS. Using SOTP valuation, we value it at Rs179 and maintain our 'Reduce' rating on the stock.

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