Buy Laxmi Dental Ltd for the Target Rs 280 by Motilal Oswal Financial Services Ltd
Beat on EBITDA & PAT, led by aligners and exports New US leadership and scanner push strengthen domestic/international levers
* Laxmi Dental (LAXMIDEN) delivered an in-line revenue for the quarter. The EBITDA/PAT were better than expected (11%/14% beat) in 1Q. Strong traction in the international market and revival in growth of the aligner business led to an improved overall performance.
* Market presence and healthy relationships enabled robust growth in the international business. This was further supported by currency benefits. Moreover, the appointment of a new CEO for the US business and the addition of salespeople are likely to expand relationships and add growth levers in the international segment.
* Through scanner sales, LAXMIDEN is cementing relationships in the domestic segment as well. While the gestation period is likely to be six months to one year for meaningful conversion to revenue post-application of scanner, the company is focusing on educating the dental community and gaining market share.
* We broadly maintain our estimates for FY26/FY27. We value LAXMIDEN at 27x 12M forward earnings to arrive at our TP of INR280. We expect an 18%/ 34%/35% CAGR in revenue/EBITDA/PAT, reaching INR3.9b/INR788m/ INR567m over FY26-28. With momentum already built in the international segment, along with a revival in the aligner business and a strengthened dentist network in the domestic market, we expect growth momentum to sustain over FY26-28. Reiterate BUY.
Improved operating leverage fuel EBITDA growth
* Revenue for 1QFY27 grew 14% YoY to INR747m (our est: INR761m).
* Gross margin stood at 78.6% (up 530 bps) driven by change in product mix
* EBITDA margin came in at 19.2% (our est: 17%), up 110bp YoY. This was due to increase in employee/other expenses (up 200/220bps as % of sales).
* EBITDA grew 20.6% YoY to INR144m (our est: INR129m).
* Adj. PAT grew 23% YoY at INR103m (our est: INR90m)
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