Buy Laxmi Dental Ltd for the Target Rs. 500 by Motilal Oswal Financial Services Ltd
Operationally in-line quarter
Digital push and scanner sales momentum to drive multi-year growth
* Laxmi Dental (LAXMIDEN) reported in-line revenue for the quarter, with EBITDA beating expectations by 7%. Earnings were also in line with estimates.
* Compared to the robust 20% revenue CAGR over FY23-25, 1QFY26 witnessed a temporary moderation in YoY revenue growth. That said, LAXMIDEN has a well-defined plan in place to maintain its growth trajectory on an annual basis.
* LAXMIDEN has been implementing measures to increase its digital presence in key focus markets. This is expected to not only enhance engagement within its dentist network but also support the marketing of additional products, such as aligners, through the same channel.
* Compared to 250 scanners sold in FY25, LAXMIDEN sold over 200 scanners in 1QFY26 and targets to sell over 1,000 scanners in FY26.
* Industry tailwinds remain strong for the aligners business, and LAXMIDEN is well-positioned to benefit from them, given its established relationship with dentists and its end-to-end manufacturing capabilities. The company continues to expand its presence across Tier I/II cities and is steadily increasing business from its existing dentist network.
* We largely maintain our estimates for FY26/FY27. We value LAXMIDEN at 40x 12M forward earnings to arrive at a TP of INR500.
* We expect 24%/47%/68% revenue/EBITDA/PAT CAGR over FY25-27, led by a) increased traction driven by a higher digital reach, b) CE approval for its kid-e-dental product, c) higher registration in newer geographies, and d) better operating leverage. Reiterate BUY.
Lower revenue and operating leverage drag EBITDA and PAT for 1QFY26
* LAXMIDEN’s 1QFY26 revenue grew 10% YoY to INR656m (in-line).
* Laboratory offering sales grew 14% YoY to INR444m. The International business grew 12% YoY to INR176m, while the domestic business grew 4.4% YoY to INR210m. Within lab offerings for the domestic/international segment, scanner sales grew 93% YoY to INR58m.
* Aligner solution sales grew 7% YoY to INR186m. Within aligners, the Bizdent business grew 3.3% YoY to INR93m. The Vedia business grew 37% YoY to INR92m.
* Gross Margin (GM) contracted 260bp YoY to 73.3% due to an increase in raw material costs (down 260bp YoY).
* EBITDA margin contracted 530bp YoY to 18.2% (our est: 17%), largely due to a contraction in GM, supported by increased employee expenses (820bp YoY each as a % of sales).
* As a result, EBITDA declined 15% YoY to INR119m (our est: INR112m).
* Kids-e-dental’s 1QFY26 revenue stood at INR44m, down 48% YoY.
* PAT declined 21% YoY to INR83m (in line) due to ESOP as well as a decline in Kids-e-dental’s revenue.
Highlights from the management commentary
* While revenue grew 10% YoY in 1QFY26, management remains confident of achieving 20-25% YoY growth for FY26.
* LAXMIDEN has sold over 200 scanners in 1QFY26; it aims to sell over 1,000 scanners during FY26.
* Delays in regulatory approvals impacted the performance of Kids-e-dental. However, LAXMIDEN expects growth in this segment to pick up from 2QFY26/3QFY26.
* Through its investments in AI Dent, LAXMIDEN aims to offer AI-powered solutions—such as dental imaging, X-ray analysis software, and other AI-driven dentistry tools—to existing customers. These additions are expected to further enhance the value proposition of its current offerings
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