Laxmi Organic Industries shares listed on the stock exchanges today at a premium more than the IPO price tag. Laxmi Organic Industries stocks created the debut on the bourses at Rs 156.20 per share, up Rs 26.20 from the IPO price tag of Rs 130 apiece. Laxmi Organic Industries entered Dalal Street earlier this month to raise Rs 600 crore via the public concern. Amid the surging interest in IPOs, Laxmi Organic Industries’ public concern was subscribed 107 occasions by investors. Shares of Laxmi Organic had a industry capitalization of Rs 4,118 crore on the listing.
Laxmi Organic Industries is a different major chemical substances manufacturer. The company’s items obtain application in a variety of higher-development industries, which includes pharmaceuticals, agrochemicals, paints, printing, packaging, flavours, fragrances, adhesives and other industrial applications. Laxmi Organic is also the only Indian manufacturer of diketene derivatives with a substantial industry share and one of the biggest portfolios of diketene items, according to Angel Broking.
Through the quantity raise through the IPO, Laxmi Organic plans to repay debt and use the funds to invest in Yellowstone Fine Chemicals Private Limited, a subsidiary of the business. Post concern, promoter shareholding has been trimmed to 72.9% from 89.5% pre-IPO. Public shareholding in the firm now increases to 27.1% from 10.5% earlier.
Valuations issues do persist for Laxmi Organic Industries. “At Rs 130, the stock is available at 48.8x FY20. We believe valuations are on the higher side given it is a commodity business,” ICICI Direct stated in a note. “We also believe that upcoming incremental opportunity from fluoro-specialities division for three/four years forward is also largely discounted in the price and thus leaves limited opportunity on the table,” the note added.
Laxmi Organic Industries plans to expand its present item offerings, which will help development going forward. “. It intends to perform and deliver products pursuant to the long-term contracts already entered into with certain customers. The company believes that the introduction of such products would increase profit margins and the long-term contracts would provide incremental and steady revenues,” ICICI Direct stated.
Highlighting the dangers involved, Angel Broking noted that the company’s manufacturing facility is situated in one geography which poses a threat. Further, owing to its exposure to foreign consumers the threat of foreign currency exchange runs highs. Meanwhile ICICI Direct stated that Acetic acid rates stay volatile which is a essential raw material for Laxmi Organic’s acetyl intermediates.
Laxmi Organic Industries joins the likes of Aarti Industries, Atul Ltd, Fine Organic Industries, Navin Fluorine International, Rossari Biotech, and SRF that are currently listed on the bourses.