The data has been compiled from various sources and might have small difference but overall theme is to subscribe or not — we will focus on that
Laxmi Organics IPO– Almost 30 yr old company involved in manufacturing of ethyl acetate and diketene and derivatives
Business — Company is among the largest manufacturer of ethyl acetate with 30% market share in India and sole manufacturer of diketene with 55% market share in India approximately
Offer purpose — Offer for sale (600cr) including fresh issue of 300 cr. for repayment of debt, existing capacity expansion and new expansion for specialty chemicals
Key domains -Company have two major segments.Acetyl (52% revenue with single digit margin) and specialty intermediates (28% revenue with double digit margin)
Risks —
Company has low margins for its products
High raw material cost poses challenge for company
Strength
Company products are used in various industries and well diversified
Company have low customer concentration with no customer having more than 10% revenue contribution
Future
Company is expanding to lucrative fluorospeciality segment which have higher margins
Company existing capacity is being expanded and thus gives revenue visibility
Valuations
Looking at EBITDA and growth shown, company looks expensive
Bullish market and IPO frenzy makes the valuations stretched leaving little room for improvement until company shows growth
Should we apply?
People can subscribe for long term only if they want to bet on growth potential on new segments
If applying, recommended to sell on getting gains on listing day
One can avoid for investment purposes presently as there are better listed option available in market
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