Reduce Laxmi Organic Industries; target of Rs 192: Prabhudas Lilladher

Prabhudas Lilladher's research report on Laxmi Organic Industries

LXCHEM reported Q2FY26 revenue of Rs6.9bn, down 9.3% YoY but up 1% QoQ. The Essential Chemicals segment, contributing 74% of total revenue, declined 5% YoY. EBITDAM for the segment stood at 1.9% declined by 320bps YoY, impacted by falling prices of key raw material acetic acid, which compressed spreads in ethyl acetate (constitutes 80–85% of essentials basket). The Specialty Chemicals segment posted a 20% YoY revenue decline, impacted by the phase-out of a product contributing ~10% of the portfolio and the deferment of certain product deliveries to H2FY26. A replacement product for the phased-out product is expected to launch by Q4FY26, implying continued pressure on specialty revenues in Q3FY26. The Fluorochemicals segment remains in its ramp-up phase, with management guiding for 40–60% of its Rs2 bn peak revenue potential to be achieved in FY26. On the demand side, the Agrochemicals segment remains subdued, while sub-segments such as pharmaceuticals, printing & packaging, and colors & pigments continue to show stable trends.

Outlook

With ethyl acetate spreads likely to remain under pressure in the near term, we maintain a cautious view on the stock and retain our Reduce rating. The stock currently trades at 29x Sep’27E EPS. Using SOTPbased valuation, we arrive at a target price of Rs 192.

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