Subscribe to Laxmi Organic Industries: Ajcon Global

Ajcon Global IPO report on Laxmi Organic Industries

Laxmi Organic Industries Limited (“Laxmi Organic”) was incorporated on May 15, 1989. The company is a leading manufacturer of Acetyl Intermediates and Specialty Intermediates with almost 3 decades of experience in large scale manufacturing of chemicals. Laxmi Organic is currently among the largest manufacturers of ethyl acetate in India with a market share of approximately 30% of the Indian ethyl acetate market. Further, post completion of the Yellowstone Chemicals Pvt. Ltd. (“YCPL”) Acquisition, their market share in the ethyl acetate market will be further enhanced. Laxmi Organic has global footprint with customers in over 30 countries. In 2010, Laxmi Organic commenced manufacturing the Specialty Intermediates by acquiring Clariant’s diketene business. Laxmi Organic is the only manufacturer in India of diketene derivatives with a market share of approximately 55 % in terms of revenue in FY20.

Valuation and Outlook

At the upper end of the price band of Rs. 130, the Company's IPO is valued at P/E of 38x on H1FY21 annualised EPS and at a P/E of 49x on post IPO FY20 EPS which is expensive. The Company will always enjoy premium over its peers post listing as it is a strongly placed in the space it operates with good return profile. We recommend to "SUBSCRIBE the issue for listing gains" due to the following factors.

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