March 12, 2021 - Beeline Blog

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Issue Highlights

Laxmi Organic Industries is a specialty chemical manufacturer, based in Mumbai and having domestic and international operations (Europe, UAE and China). It is set to raise INR 600 Crs through an initial offer.

Issue Details

Company Strengths

Leading manufacturer of ethyl acetate with significant market share
Only Indian manufacturer of diketene derivatives; significant market share; the largest portfolios of diketene products.
Diversified customer base across high growth industries
Strategically located manufacturing facilities, vertical integration and supply chain efficiencies
In-house research and development capabilities
Global presence and low geographical concentration
Differentiated business model, asset base and product mix

Valuation

The company reported its EPS for FY 20 at 2.86, bringing its PE at 45.45 at upper price band, against the sector PE of 44.52. It is fairly priced.

Issue Break-Up

Utilization of Funds

Background highlights of the company in brief

Incorporated in 1989, Laxmi Organic India Ltd. is a leading manufacturer of Acetyl Intermediates and Specialty Intermediates with almost three decades of experience in large scale manufacturing of chemicals.
It is currently among the largest manufacturers of ethyl acetate in India with a market share of approx. 30% of the Indian ethyl acetate market. Post the acquisition of YCPL, the company’s market share in the ethyl acetate market will be further enhanced.
In FY 2010, the company commenced the manufacturing of Specialty Intermediates by acquiring Clariant’s diketene business.
It is the only manufacturer of diketene derivatives in India with a market share of approx. 55% of the Indian diketene derivatives market in terms of revenue in FY 2020 and one of the largest portfolios of diketene products.
The company’s Acetyl Intermediates include ethyl acetate, acetaldehyde, fuel-grade ethanol & other proprietary solvents, while the Specialty Intermediates comprises of ketene, diketene derivatives namely esters, acetic anhydride, amides, arylides & other chemicals.
It has significantly expanded its scale of operations & global footprint with customers in over 30 countries including China, Netherlands, Russia, Singapore, United Arab Emirates, United Kingdom & USA.
Currently, it has two manufacturing facilities in Mahad, Maharashtra, with one facility dedicated to Acetyl Intermediates and another to Specialty Intermediates, which are strategically located in proximity to several ports and each other.

Briefing about directors & key managerial personnel

Briefing Financials

Balance Sheet

Statement of Profit and Loss

Key Ratios

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Disclaimer: http://bit.ly/2uLiAVH

During the previous weekly trading session, equity markets witnessed a high volatility in the start of the week and then started to trade sideways to marginally positive as the investors didn’t get a clear indication regarding the trend of the market. Sensex and Nifty touched the lows of 50,318 and 14,920 on Monday and Highs of 51,430 and 15,218 respectively on Wednesday. On Wednesday, the investors were not keen to carry positions due to the bank holiday on Thursday.

The markets are on their way to recover the losses of the previous week’s trading session, but at a slower pace. India’s Markit Services PMI numbers for the month of February 2021 came in better than expected, which uplifted the investors’ sentiments, as it indicates improvement in economic health of the country. Also, because of mixed global cues, the market failed to give any clear indications for the trend. Equity markets seems to be in a consolidation phase.

As far as sectoral indices are concerned, Bank Nifty gained more than 2% during the week, with Private Banks and PSU Banks gaining approximately 2.0% and 0.5% respectively. The rise in private banks was after the announcement of our Financial Minister Nirmala Sitharaman, that the embargo on private banks was lifted up, which means that now eve private banks can carry out government-related banking transactions such as taxes and other revenue payment facilities. Nifty Financial Services also gained more than 2.1%. Nifty IT gained 3.1%, Nifty Pharma gained 1.0%, whereas, Nifty FMCG, Nifty Metal and Nifty Auto hardly managed to closed in green. Nifty Energy (-0.5%), Nifty Media (-0.1%) and Nifty Realty (-1.5%) lost during the week.

For the upcoming week, the equity market is expected to come out of its consolidation phase. Investors need to keep an eye on India’s industrial production data, WPI manufacturing data, Inflation rate data which will be released in the upcoming week as they will affect the equity markets. Technically, indices needs to sustain above the levels of 15,180/51,275 to confirm its bullish trend and we may see Nifty nearing the levels of 15,300 in the near future. However, if the indices breaks the levels of 15,000 and sustains below that, then it confirms a bearish trend.

Page 8, NavGujarat Samay, 12th March’21.

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