Laxmi Organic IPO: The initial public offer was subscribed 6.05 times on second day of issue

Laxmi Organic Industries share sale via initial public offering (IPO) was subscribed 6.05 times on the second day of the issue, according to subscription data on the exchanges. The specialty chemical manufacturer’s IPO was oversubscribed – 2.28 times on the first day of the issue – March 15. Retail investors showed huge interest in the IPO as the portion reserved for them was subscribed 10.38 times, on March 16 by 5:00 pm. The portion set aside for non-institutional buyers was subscribed 2.48 times, while the portion reserved for qualified institutional buyers was subscribed 1.15 times. (AlsoRead: Laxmi Organic Industries IPO Oversubscribed On First Day Of The Issue )

Laxmi Organic Industries’ Rs 600 crore IPO opened for bidding yesterday, March 15, and will close on March 17, remaining open for subscription for a period of three days. The company has fixed the price band at Rs 129-130 per share. Through its initial public offer, it expects to raise Rs 600 crore at the higher end of the price band. The shares of Laxmi Organic Industries are likely to be listed on the bourses on March 25.

The company’s IPO market lot size is 115 shares. A retail-individual investor can apply for up to 13 lots, specifically 1495 shares or Rs 194,350. Laxmi Organic Industries was incorporated in 1989 and is the leading manufacturer of ethyl acetate in the country. It is a specialty chemical manufacturer and operates in two business segments namely, acetyl intermediates and specialty intermediates. The company has over 30 per cent market share in the Indian ethyl acetate market and is the only manufacturer of diketene derivatives in the country.

What Analysts Say:

“At the higher end of the price band, Laxmi Organic IPO is priced at ~49.8 times FY20 Earnings Per Share (on a trailing basis), and around ~37.6 times annualised EPS of 1HFY21. This is reasonable, considering that listed peers such as Aarti Industries (PE of ~45), Fine Organic (PE of 62), and Rossari Biotech (PE of  71), are trading at higher valuations. Its expansion into high-margin fluorochemicals space brightens its topline and bottomline growth outlook over the long-term.

Considering factors such as good return ratios, robust growth outlook, dominant market share, and reasonable valuations, we remain positive on the long-term prospects of the issue,” INDmoney said in a report.

Domestic brokerage firm Anand Rathi has given a ‘subscribe’ rating on the stock. ”At the upper end of the IPO price band, it is offered at 49.81x its FY20 earnings, with a market cap of Rs. 3428 crores. The company has strong presence in Acetyl Intermediaries & Specialty Intermediates business; further it is establishing Fluorospecialty chemicals business. The company also plans expand and optimise its capacity and product portfolio,” Anand Rathi said in a report.

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