Buy Laxmi Organic Industries; target of Rs 376: KR Choksey

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KR Choksey's research report on Laxmi Organic Industries

Laxmi Organic Industries Ltd (LOIL) reported revenue of INR 6,546Mn(-23.9% YoY/+0.4% QoQ) on account of fall in Acetyl Intermediates (AI) prices and lower demand in Specialty Intermediates (SI) compared to last year. However, the prices in AI segmenthas begun to stabilize on a sequentialbasis; whereas SI demand started coming back towards the end of Q3FY23. EBITDA reported at INR 548Mn (-53.8% YoY/+91.4% QoQ). EBITDA margin stood at 8.4% (-543bps YoY/+398bps QoQ); an improvement in margin performance on a sequential basis was mainly on account of correction in input costs and narrowing spread of AI segment. Net Profit decline by 66.8% YoY at INR 273Mn (+216.1% QoQ), Net margin reported at 4.2% (-538bps YoY / +284bpsQoQ). EPS stood at INR 1.03 in Q3FY23 compared to INR 3.07 in Q3FY22 and 0.33 in Q2FY23.

Outlook

We revise our target price at INR 376 by assigning PE multiple of 24.0x to FY25E EPS (Previous TP: INR 380) and rolling over our estimate from FY24E to FY25E while maintain our ‘BUY’ recommendation (upside 41% ).

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Laxmi Organic Industries - 31 -01-2023 - kr