The initial public offering (IPO) of Laxmi Dental opens for bidding on Monday, January 13. The company is offering its shares in the range of Rs 407-428 apiece. Investors can apply for a minimum of 33 equity shares and its multiples thereafter. The issue shall close for bidding on Wednesday, January 15.
Incorporated in July 2004, Mumbai-based Laxmi Dental is an integrated dental products company. It offers custom crowns and bridges, branded dental items like clear aligners and thermoforming sheets, aligner-related products as part of its aligner solutions, and pediatric dental products.
The Rs 698.06 crore-IPO of Laxmi Dental includes a fresh share sale of Rs 138 crore and an offer-for-sale (OFS) of up to 1,30,85,467 shares amounting to Rs 560.06 crore. The net proceeds from the issue shall be utilized towards repayment/prepayment of certain borrowings, investment in certain subsidiaries, funding the capex; and general corporate purposes.
Ahead of its IPO, Laxmi Dental raised Rs 314.13 crore from anchor investors as it finalised allocation of 73.4 lakh equity shares at a price of Rs 428 apiece. Investors including Abu Dhabi Investment Authority, Nomura Trust, Goldman Sachs, Natixis International Funds, Eastspring Investments, Whiteoak Capital, Ashoka Whiteoak ICAV, Invesco and more participated in the anchor book.
Laxmi Dental offers thermoforming sheets, biocompatible 3D printing resins, and machines for manufacturing clear aligners under the brand name Taglus. It operates a fully integrated model, meaning they handle the entire process from design and manufacturing to distribution of dental products.
The company has reserved 75 per cent of the net offer for the qualified institutional bidders (QIBs), while non-institutional investors (NIIs) will get 15 per cent of the net offer. Retail investors will have the remaining 10 per cent of the share reserved for them. The company will command a total market capitalization more to Rs 2,350 crore.
Laxmi Dental reported a net profit of Rs 22.74 crore with a revenue of Rs 117.9 crore for the six months ended on September 30, 2024. The company's net profit came in at Rs 25.23 crore with a revenue of Rs 195.25 crore for the financial year 2023-24. Last heard, the company commanded a grey market premium (GMP) of Rs 160 apiece, suggesting a 37 per cent listing pop.
Nuvama Wealth Management, Motilal Oswal Investment Advisors and SBI Capital Markets are the book running lead managers of the Laxmi Dental IPO, while Link Intime India is the registrar for the issue. Shares of the company shall be listed at both BSE and NSE on January 20, 2025, Monday. Here's what brokerage firms said about the IPO of Laxmi Dental:
Anand Rathi Research
Rating: Subscribe for long-term
Laxmi Dental is among the few vertically integrated players globally and the only vertically integrated company in India as of September 2024. The issue is asking for a marketcap of Rs 2,352.2 crore and based on FY25 annualised earnings, the company is asking a PE of 64.6 times which is aggressively priced, said Anand Rathi Research.
"We believe that going forward company’s growth factor could be driven by trends such as the changing regulatory requirements in the medical devices sector helps transition from unorganized to organized players, increasing awareness and demand for dental aesthetics, and the growing preference for metal free dental products," it added with a 'subscribe for long term' rating.
Nirmal Bang Securities
Rating: Subscribe
Laxmi Dental faces competition from unorganized market in India where it expects consolidation over the near to medium term. It focuses on the existing B2B2C model, which is expected to support its future growth with strong R&D for product innovation and services. The issue is valued at a P/E of 70 times, which is believed to be a relatively high price, said Nirmal Bang Securities.
"The company is operating a business model which has no relative listed peers in the industry. It has delivered remarkable performance over the last few years with a strong growth and healthy return ratios. The company has delivered consistent margin expansion on operating level over the last few years," it added with a 'subscribe' rating for the issue.
Arihant Capital Markets
Rating: Subscribe for listing gains
Laxmi Dental is India’s only fully integrated dental products company. With over 20 years of experience, the company operates six manufacturing facilities, serving over 22,000 dental clinics and exports to the US and UK. Its vertically integrated model ensures cost control, with in-house production of aligner sheets and 3D printing resins, said Arihant Capital.
Its foray into newer streams of digital dentistry streams reflects its diversification capabilities. The company aims to expand both domestically and internationally through innovation and digital solutions and is all set to benefit from the industry tailwinds, especially in the domestic market. We have a 'subscribe for listing gains' rating for the issue," it said.
KR Choksey Finserv
Rating: Neutral
Laxmi Dental has consistently expanded its production capacity and diversified its product portfolio. The demand for cosmetic dentistry procedures like teeth whitening and clear aligners is growing rapidly. The company is positioned to benefit from the industry tailwinds. It has achieved a 5 times asset turnover, said KR Choksey Finserv.
"The share of branded products in its revenue has risen significantly to 40 per cent in FY24, contributing to margin expansion. Laxmi Dental is well-positioned with planned capex and a strategic shift toward branded products. However, the absence of long-term contracts introduces uncertainty to near-term growth prospects," it added with a 'neutral' rating for the issue.
StoxBox
Rating: Subscribe
Laxmi Dental has witnessed margin improvement to 19.5 per cent in H1FY25, driven by operational efficiencies. The reduction in interest cost following debt repayment is likely to improve profitability further. The issue is valued at a P/E of 89.2 times on the upper price band based on FY24 earnings, said StoxBox.
"However, we believe that factors such as the shift from the unorganized to the organized segment, greater awareness and adoption of dental aesthetics and a shift towards metal-free products are likely to drive growth for the company. Therefore, we recommend a 'subscribe' rating for the issue, it said.
Canara Bank Securities
Rating: Subscribe
Laxmi Dental's key competitive advantages include cost-effective aligners, faster delivery times, and backward integration via its Taglus brand. It is poised to benefit from increasing dental awareness in India and global outsourcing trends, particularly in the US. A recent partnership with a major US dental network further enhances growth prospects, said Canara Bank Securities.
"However, economic sensitivity, competition, and promoter stake dilution are risks that require monitoring. Financially, the valuation is at the higher end, with a P/E of 89.17 times as of FY2024 and an estimated P/E of 48.75 times for FY2025E, suggesting fair pricing without direct listed competitors for comparison. We recommend to 'subscribe' to this IPO for long-term gains," it said.
Mehta Equities
Rating: Subscribe for long-term
As Laxmi Dental is India’s only end-to-end integrated dental product company operating in a niche and growing market segment may command a higher valuation multiple. Investors should also look at IPO offers which come with Rs 560.06 crore OFS which is 80 per cent of total issue which is an area of concern for new investors, said Mehta Equities.
"We believe by leveraging its B2B2C model and innovative offerings, Laxmi Dental is well-positioned to capture a significant share in the growing dental solutions space. Hence, we recommend risk taking investors to 'subscribe for long term' rating for Laxmi Dental IPO," it said.
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