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Background

Incorporated in 2004, Laxmi Dental Ltd (LDL) is India’s only end-to-end integrated dental products company that offers a comprehensive portfolio of dental products. The product portfolio includes custom-made crowns and bridges, branded dental products such as clear aligners, thermoforming sheets and aligner related products as a part of aligner solutions, and paediatric dental products. It has six manufacturing facilities spread across 1.47 lakh square feet.

Details of the Issue:

* Total issue of ~Rs. 698 Cr: i) Fresh issue of Rs. 138 cr, ii) OFS worth Rs. 560 cr

* Proceeds from the fresh issue to be utilised for - i) Total debt repayment worth Rs. 27.6 cr (LDL Rs. 22.9 cr & Subsidiary Rs. 4.6 cr), and ii) Capex worth Rs. 68.5 cr (LDL - Rs. 43.5 cr & Bizdent Devices, a subsidiary - Rs. 25 cr)

Investment Rationale:

* Strong R&D and technological capabilities enable developing a diverse product portfolio with innovation

* Strong market presence & extending global reach to enhance its growth potential

* Business to drive growth backed by both organic as well as inorganic growth, and favorable industry dynamics

* Aims at leveraging digital platforms and customer centric approach

* Strengthening penetration across Dental Network

Valuation and Recommendation:-

Laxmi Dental is one of the prominent players in the dental industry, which has a vertically integrated business model ensuring cost efficiency. The Company faces competition from unorganized market in India where it expects consolidation over the near to medium term. Also, it focuses on 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 valuation of ~70x based on adjusted H1FY25 annualised earnings, which is believed to be a relatively high price. The company is operating a business model which has no relative listed peers in the industry. It has delivered a remarkable performance over the last few years with a strong growth (revenue growth at ~19% CAGR between FY22-24) and healthy return ratios (H1FY25 Ann ROE: 50.3% and ROCE: 33.4%). Company has delivered consistent margin expansion on operating level over the last few years. Debt reduction worth ~Rs. 28 cr is expected to support bottomline growth to an extent. We expect future business growth backed by favorable industry dynamics, company’s potential expansion plans with an aim to extend its reach in the global market. Thus, we recommend SUBSCRIBE to the issue.

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SEBI Registration number is INH0000017660