The initial public offering (IPO) of Laxmi Organic Industries subscribed 6.05 times on March 16, the second day of bidding as investors put in bids for 19.69 crore equity shares against the offer size of 3.25 crore shares, subscription data available on exchanges showed.
The portion reserved for retail investors subscribed 10.38 times and that of non-institutional investors 2.48 times, while the portion set aside for qualified institutional buyers has subscribed 1.15 percent.
A leading manufacturer of acetyl intermediates (AI) and speciality intermediates (SI), Laxmi Organic plans to raise Rs 600 crore through the public issue comprising a fresh issue size of Rs 300 crore and an offer for sale of Rs 300 crore by promoter Yellow Stone Trust.
The price band has been fixed at Rs 129-130 per share and the company has already raised Rs 180 crore from anchor investors at the higher price band.
"We recommend subscribe on Laxmi Organic's IPO with a long term perspective given its striking growth plans led by 1) scheduled new acquisitions, 2) expansion of core business, 3) entry in high margin fluoro chemistry segments and 4) long term contracts for speciality intermediates," said Prabhudas Lilladher.
Laxmi Organic is India's largest manufacturer of ethyl acetate, with a 30 percent market share. It is the sole manufacturer of diketene derivatives in India, with a 55 percent market share.
"While growth has been muted in FY20 due to floods and low production along with weak spreads, we expect it to improve as new capacities and business segment come on stream in FY22 and FY23. On an annualised H1FY21 numbers, the stock is valued at PER of around 38x FY21, which is not expensive given the earnings driver once capacities get commissioned," said the brokerage.
The company's products find application in varied high-growth industries including pharmaceuticals, agrochemicals, dyes & pigments, inks & coatings, paints, printing & packaging, flavours & fragrances, adhesives, etc.
It has a total capacity of around 240kmt. It is expanding AI capacity by 39.7kmt through inorganic route to 201kmt. It is also augmenting the capacity of SI business by 4.5kmt to 82.5kmt.
Laxmi Organic Industries shares were traded at a 69-77 percent premium (Rs 90-100) over the issue price of Rs 130 (the higher price band) in the grey market, the data available on IPO Watch showed.