IGI Logo

Laxmi Organic Industries Ltd. is a leading manufacturer of Acetyl Intermediates and Specialty Intermediates with almost three decades of experience in large scale manufacturing of chemicals. Company started its business in 1989, with initially manufacturing acetaldehyde and acetic acid in 1992, and soon thereafter moved on to manufacturing of ethyl acetate in 1996; currently among the largest manufacturers of ethyl acetate in India with a market share of approximately 30% of the Indian ethyl acetate market.

Positives: (a) Leading manufacturer of ethyl acetate with significant market share (b) Only Indian manufacturer of diketene derivatives with a significant market share and one of the largest portfolios of diketene products (c) Diversified customer base across high growth industries and long-standing relationships with marquee customers (d) Strategically located manufacturing facilities, vertical integration and supply chain efficiencies.

Investment concerns: (a) The continuing impact of the outbreak of the COVID-19 could have a significant effect on operations, and could negatively impact business, revenues, financial condition and results of operations. (b) A large part of the manufacturing facilities is located in one geographic, and therefore, any localized social unrest, natural disaster or breakdown of services could have material adverse effect on operations. (c) Due to foreign client base, it is exposed to foreign currency exchange risks which may adversely impact our results of operations.

Outlook & Valuation: Based on FY2020 earnings the IPO is priced at a PE of 42x at the upper end of the price band along with a good ROE of 16.4%. The company is the largest manufacturer of ethyl acetate with over 30% market share in the Indian ethyl acetate market and the only manufacturer of diketene derivatives in India with a diversified customer base. Looking at the competitive advantage and strong growth potential we are assigning a “SUBSCRIBE” recommendation to the issue.

To Read Complete Report & Disclaimer Click Here

Please refer disclaimer at https://trade.angelbroking.com/Downloads/ARQ-Disclaimer-Note.pdf

SEBI Registration number is INH000000164

Above views are of the author and not of the website kindly read disclaimer