Reduce Laxmi Organic Industries Ltd For Target Rs.143 by Prabhudas Liladhar Capital Ltd
Higher realization drives sequential performance
Laxmi Organic Industries (LXCHEM) reported consolidated revenue of Rs7.4bn, up 3.6% YoY and 2.3% QoQ, primarily driven by higher price realizations. The Essentials segment contributed ~71% of the total revenue, +6.6% YoY and +3.9% QoQ. The Specialty Chemicals segment recorded 18% degrowth in FY26; however, EBITDA margin contracted by 300bps to 15.8%. One of the products in this segment is undergoing a regulatory phase-out, which is expected to impact near-term topline performance as its replacement product is recently commercialised.
Management highlighted that the Fluorochemicals segment achieved nearly 40–45% of peak revenue potential in FY26 and maintains a healthy order book for FY27, with full ramp-up expected in FY27 itself. The company also successfully commissioned its Ethyl Acetate plant at Lote. Demand for printing & packaging and pharma segments remained stable during Jan–Feb and witnessed improvement in Mar, whereas industrial solutions demand remained steady during the quarter.
At CMP, the stock trades at 35x FY28E EPS. We value the stock at Rs143/share based on SOTP valuation and maintain our ‘Reduce’ rating on the stock
Revenue increased 3.6% QoQ/2.3%YoY:
Consolidated revenue stood at Rs7.4bn (up 3.6% YoY and 2.3% QoQ), slightly ahead of PLe of Rs7bn and consensus estimate of Rs7.1bn. Revenue growth was primarily driven by higher price realizations, while the company also recognised reversal of Rs407.3mn Maharashtra electricity duty liabilities under other operating income following a favourable MERC ruling during Q4FY26. However, FY26 revenue declined 4.6% YoY to Rs28.5bn. Gross profit margin stood at 33.6% compared with 34.6% in Q4FY25 and 33.9% in Q3FY26.
EBITDAM contracted by 100bps YoY:
EBITDA stood at Rs536mn, decreased 9.1% YoY but increased 7.4 % QoQ, (PLe: Rs328mn, Consensus: Rs350mn). EBITDA margin came at 7.3% (vs 8.3% in Q4FY25 and 6.9% in Q3FY26), slightly higher sequentially due to lower operating expenses. The company changed its depreciation method from Written Down Value (WDV) to Straight Line Method (SLM) effective March 31, 2026 leading to lower depreciation. Reported PAT was at Rs216mn, declining 1% YoY and 15.2% sequentially, PAT margins were at 3%, compared with 3% in Q4FY25 and 4% in Q3FY26.
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