IPO listed on 20 Jan'25
Laxmi Dental Ltd
Minimum Investment
₹ 14,124 / 33 shares
Grey market premium
₹ 145 (34% premium)
Issue price
₹ 428
Listing price
₹ 542
Listing gains
114 (27%)
Listing on
Jan 20, 2025
Our Verdict:
Neutral
- Laxmi Dental Ltd (LDL) has established a robust network of over 22,000 dental clinics and maintains a strong global footprint, currently serving ~95 countries with plans to expand further. Following a significant turnaround in FY24, profitability is expected to improve as debt repayment will reduce interest costs.
- With a P/E multiple of 84x based on FY24 earnings, the IPO appears to be fully priced. However, the grey market premium suggests a positive debut on the stock exchanges.
- LDL's strategic shift toward branded products and planned capital expenditures positions the company for future growth. However, the absence of long-term contracts raises concerns about near-term growth stability. Additionally, the IPO’s Rs 560.06 crore offer for sale (OFS), comprising 80% of the total issue, is another point of concern for investors.
- Considering these factors, investors with a higher risk appetite may explore the IPO for potential listing gains. Long-term investors, however, are recommended to evaluate the stock post-IPO at more reasonable valuations, as favourable industry trends provide growth opportunities.
About the company
Founded in
8 Jul'04
Managing director
Sameer Merchant
- LDL is an integrated dental products company offering a wide range of dental solutions. It operates six manufacturing facilities in India, serving clients in ~95 countries. As of September 2024, the firm employs 2,372 people and partners with more than 22,000 clinics and dentists worldwide.
- LDL’s product portfolio spans three primary segments: (i) Laboratory Solutions, featuring custom-made dental prosthetics such as premium zirconia crowns, bridges, PFM crowns, and dentures; (ii) Aligner Solutions, which include aligners, retainer materials, thermoforming machines, 3D printing resins, and consumables; and (iii) Paediatric Dental Products, such as pre-formed zirconia crowns, space maintainers, fissure sealants, splints, and mineral trioxide aggregate.
STRENGTHS
- Market Leadership: LDL is the second-largest player in the domestic laboratory business and the largest export laboratory, with increasing adoption of digital dentistry. As India’s only fully vertically integrated aligner player, it controls the entire value chain, ensuring better supply chain efficiency, reduced turnaround times, and cost savings.
- Global Presence: LDL exports its products to 95 countries and is the largest exporter of custom-made dental prostheses among Indian dental labs, catering primarily to US and UK.
- Impressive Growth Trajectory: LDL has achieved a CAGR of 19% in operational revenue from FY22 to FY24, driven significantly by its new ventures in aligners and paediatric products.
- Financial Turnaround: LDL transformed its financial performance, moving from a loss of Rs 4.45 crore in FY23 to a profit of Rs 17.94 crore in FY24, further improving to Rs 18.19 crore in H1FY25.
- Improving Margins: Gross margins expanded from 71% in FY22 to 76% in H1FY25, fuelled by an increased share of branded products (40% of sales in H1FY25 compared to 29% in FY22). Additionally, operational leverage significantly boosted EBITDA margins, growing from 4% in FY22 to 19.5% in H1FY25.
RISK FACTORS
- Profitability Concerns: LDL has reported consolidated losses, negative earnings per share for FY23 and FY22, and has written off assets over the last three fiscal years. Its profitability is dependent on various factors, making it contingent on their outcomes.
- Legal Risks: LDL, along with its subsidiaries, promoters, and directors, is involved in ongoing legal proceedings amounting to approximately Rs 41 crore. An unfavourable verdict could negatively impact business operations and financial stability.
- Export Dependency: With exports contributing around 32.5% of revenue in H1FY25, LDL is exposed to risks associated with currency fluctuations, regulatory changes, and geopolitical uncertainties in key export markets.
- Cash Flow Concerns: LDL has faced negative cash flows in the past. Persistent cash flow challenges could hinder its operational efficiency and long-term financial health.
Financials
All Values are in Cr.
Issue details
Issue type
Mainstream
Issue size
₹ 698.06 crore
Fresh Issue
₹ 138 crore
OFS
₹ 560.06 crore
Price range
₹ 407 - 428
Lot size
33 shares
Issue Objective
The net proceeds from the fresh issue are intended to be used for the following purposes:
- Repayment or prepayment of certain borrowings availed by the company and its subsidiaries;
- Funding capital expenditure for purchasing new machinery for the company and its subsidiary, Bizdent Devices Pvt. Ltd; and
- General corporate purposes.
Dates
Bidding open
13 Jan'25
Bidding close
15 Jan'25
Allotment date
16 Jan'25
Refund date
17 Jan'25
Listing
20 Jan'25
IPO Reservations
Qualified institutional buyers
>75%
Non-institutional investors
<15%
Retail individual investors
<10%
Read the Offer Document
© 2025 by Liquide Solutions Private Limited, SEBI Registered Research Analyst (Registration number - INH000009816)
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