Reduce Laxmi Organic Industries Ltd For Target Rs. 169 by Prabhudas Liladhar Capital Ltd
Laxmi Organic Industries (LXCHEM) reported consolidated revenue of INR9.7bn in Q1FY27, up 40% YoY and 32% QoQ, driven by ~10% volume growth and ~30% growth from higher realizations and an improved product mix. The Essentials segment contributed 75% of topline and grew 50% YoY, with EBITDAM expanding 940bps YoY, supported by Ethyl Acetate spreads reaching a 12-year high of USD215/tn during the quarter. However, spreads have started moderating since May'26 and are expected to normalize further as the West Asia conflict eases. The Specialty Chemicals segment reported 17% YoY revenue growth, while EBITDAM contracted 310bps YoY due to lower raw material prices. Management indicated that input costs in the Specialty business have started rising, the company continues to expect the Fluorochemicals business to achieve full ramp-up during FY27. In addition, the newly commissioned Ethyl Acetate capacity at Lote is expected to drive volume growth, while Dahej Phase II remains on track and is likely to commence commercial contribution from Q4FY27, with a gradual ramp-up through FY28. At the current market price, the stock trades at 28x FY28E EPS. We value the company at INR182/share based on our SOTP valuation and maintain our 'Reduce' rating on the stock.
Revenue increased 32% QoQ/40%YoY: Consolidated revenue stood at Rs9.7bn (39.7% YoY/ 31.7% QoQ) (PLe: Rs7.5bn, Consensus: Rs 7.3bn), actual topline was higher than PL estimates. Driven by strong volumes and prices across portfolio However, Gross profit margin was 37.5% (vs 30.8% in Q1FY26 and 33.6% in Q4FY26). primarily driven by higher changes in inventories and WIP.
EBITDAM expanded by 740bps YoY: EBITDA stood at Rs1,143mn, increased 271.8% YoY and 113.2 % QoQ, (PLe: Rs653mn, Consensus: Rs529mn). EBITDA margin came at 11.8% (vs 4.4% in Q1FY26 and 7.3% in Q4FY26), Increased primarily driven by Higher realizations and operating leverage. Reported PAT was at Rs677mn, increased 216.6% YoY and 214.2% sequentially, PAT margins were at 7%, compared with 3% in Q1FY26 & Q4FY26.
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SEBI Registration number is INH000000933
