Laxmi Dental, India’s only end-to-end integrated dental products company as of September 2024, is preparing for a significant public offering. The company manufactures a wide range of dental products, including custom-made crowns and bridges, branded dental products like clear aligners, thermoforming sheets, aligner-related products, and pediatric dental products. With its innovative approach and established reputation, Laxmi Dental is poised to attract investor attention with its upcoming IPO.

Laxmi Dental IPO Overview

• Issue Size: ₹698.05 Crores
  • Fresh Issue: ₹137.99 Crores (32.24 Lakh Shares)
  • Offer for Sale: ₹560.05 Crores (130.85 Lakh Shares)
• IPO Opening Date: January 13, 2025
• IPO Closing Date: January 15, 2025
• Allotment Date: January 16, 2025
• Listing Date: January 20, 2025
• Price Band: ₹407 to ₹428 per equity share
• Market Capitalization: ₹2,352.37 Crores at ₹428 per share
• Lot Size: 33 shares, with a minimum investment of ₹14,124 for retail investors. HNIs need to invest in a minimum of 15 lots (495 shares), amounting to ₹2,11,860.

Laxmi Dental’s IPO is being managed by leading financial services firms such as NUVAMA WEALTH MANAGEMENT LIMITED, MOTILAL OSWAL INVESTMENT ADVISORS LIMITED, and SBI CAPITAL MARKETS LIMITED, with MUFG INTIME INDIA PRIVATE LIMITED (formerly Link Intime India) acting as the registrar.

Financial Performance

Laxmi Dental’s growth trajectory over the past few years is evident in their revenues and profitability:

• Revenues for the fiscal year 2024 have been ₹1,179.00 million as of September 2024, marking a consistent increase from ₹1,638.44 million in 2023 and ₹1,380.70 million in 2022.
• EBITDA stood at ₹304.70 million for the period ended September 2024, up from ₹254.14 million in FY 2023, indicating improved operational efficiency.
• Profit After Tax (PAT) for FY 2024 was ₹227.39 million, up significantly from a loss of ₹41.63 million in FY 2023. This reflects the company’s ability to achieve sustained profitability.

Despite the company’s impressive growth, its P/E ratio is notably high, with the pre-issue P/E ratio at 83.76x and post-issue P/E ratio at 93.24x, which is close to the industry average of 94x. These metrics suggest that the IPO is fairly priced based on its growth prospects.

IPO Objectives

Laxmi Dental intends to utilize the net proceeds from the IPO for several key objectives, including:

1. Repayment/prepayment of borrowings to reduce the company’s debt burden.
2. Capital expenditure for purchasing new machinery to expand production capabilities.
3. Investment in subsidiaries to further strengthen their market position and growth potential.
4. General corporate purposes, which could include expansion into new markets and strengthening their product offerings.

Grey Market Premium (GMP)

The Grey Market Premium (GMP) for Laxmi Dental’s IPO has been trending strongly, with a GMP of ₹100, indicating a potential listing gain of approximately 24.51%. This is a favorable sign for investors considering the IPO, although it is important to note that GMP is based on unregulated market trades and should not be used as the sole indicator for investment decisions. As of January 10, 2025, the expected listing price is ₹528 based on the current GMP.

IPO Subscription and Allotment

The IPO will open for subscription on January 13, 2025, and close on January 15, 2025. The allotment date is scheduled for January 16, 2025, with shares expected to be listed on the BSE and NSE by January 20, 2025.

• Retail Investors will need to invest a minimum of ₹14,124, corresponding to 33 shares.
• High Net-Worth Individuals (HNIs) are required to invest in a minimum of 15 lots (495 shares), amounting to ₹2,11,860.

Recommendation

Based on the company’s steady growth, financial performance, and market prospects, we recommend that risky investors consider applying for the Laxmi Dental IPO for listing gains, as the potential return appears promising given the strong GMP and favorable market conditions.

While the high P/E ratio might be a concern for conservative investors, the company’s consistent performance and leadership in the dental products space provide a compelling growth story. As always, investors should evaluate their risk appetite before making a final decision.

For more information, visit https://financesaathi.com.

The Upcoming IPOs in this week and coming weeks are  Kabra Jewels and Laxmi Dental.

The Current active IPO are Sat Kartar Shopping and Barflex Polyfilms.