Laxmi Dental India Limited is set to launch its Initial Public Offering (IPO) which consists of a fresh offer of Rs. 138 crores and an offer for the sale of Rs. 560.06 crores, totalling Rs. 698.06 crores. The IPO is done by companies to raise funds for their various corporate purposes and includes expansion and debt repayment. The offer will be conducted through a book-building process and is scheduled to open on January 13, 2025, and close on January 15, 2025, and is expected to be listed on the bourses dated 20th January 2025.
Grey Market Premium
The shares of Laxmi Dental’s price in the grey market were trading at 38.08% as of January 10th, 2024. The shares in Grey Market traded at Rs.591. The premium was Rs. 163 on January 10th, 2024 which was 38.08% over the issue price.
Their Objectives of Offer
The objectives include Repayment or Prepayment of outstanding borrowings availed by the company, Investing in subsidiaries for the repayment of outstanding borrowings, Funding the capital expenditure for new machines, Investment in the subsidiary, Bizdent Devices Private Limited for capex to purchase new machinery and general corporate purposes.
About Laxmi Dental (Overview and Business Model)
The company is India’s only end-to-end integrated dental products firm that specializes in custom crowns, clear aligners, bridges, paediatric dental products, and more. With a 20-year presence in the industry, they rank among the top two Indian dental labs by revenue as per FY24 and are the largest exporter of custom dental prostheses. Their offerings include metal-free crowns, branded zirconia products, and the newly launched intraoral scanner, iScanPro.
The Indian dental market is rapidly growing which is driven by increasing demand for clear aligners, digital dentistry, and paediatric products. They operate six certified manufacturing facilities and serve over 22,000 clinics globally. The company employs a B2B2C model, leveraging its extensive network to distribute its products.
The Key highlights include the company being the first Indian brand to receive USFDA clearance for clear aligners and having a strong presence in paediatric dental products, including proprietary designs like Bioflx crowns.
The Financials & Ratios
The company’s revenue from operations stood at Rs. 193.55 crore in FY24, a 19.75% growth from Rs. 161.63 crore in FY23. Net Profits stood at Rs. 25.22 crore in FY24 which is a turnaround from a loss of Rs. 4.16 crore. In September 2024, the company registered a revenue of Rs. 116.78 crore.
The improvement in profits was due to a reduction in employee cost which forms a major part of the expenses followed by other expenses which saw a similar reduction compared to operational revenue and then raw material cost. These operational efficiencies in the longer run can help companies during the industry downturns.
The return on net worth in FY24 stood at 78.78% which has increased from -19.62% from a year ago. Return on Capital Employed improved from 19.97 percent in FY24 to -0.33 percent in FY23.
Laxmi Dental vs. Peers
In RHP, the Company has mentioned its listed peers as Poly Medicure. When compared to operational revenue, Poly Medicure has nearly more than 5 times compared to Laxmi Dental’s revenue. The PAT Margins of Poly Medicure are higher compared to Laxmi Dental. However, Laxmi Dental was able to turn profitable and attain a margin of more than 10 percent. The Return on Equity (RoE) for Laxmi is superior at 78.78 percent compared to Poly Medicure with 19.05 percent in FY24. However, the increase in RoE of Laxmi is due to near similar reserves compared to its profitability in FY24.
Strengths of the company
● The company is the second largest player in the domestic laboratory business and the largest export laboratory with increasing adoption of digital dentistry.
● Their business is vertically integrated with a diverse branded product portfolio.
● They have a large dental network while providing a competitive advantage in the market.
● Laxmi Dental holds technologically advanced capability with stringent regulatory compliance while ensuring high-quality standards
● The company has an experienced management team with Industry experience.
Risks of the company
● The majority of the revenue is earned from Revenue from B2B2C and might possess the diversification risk which is dependent on dental network expansion.
● A significant portion of the dental products are manufactured from six plants which are situated near and in the Mumbai Metropolitan area and can be affected if there are any disruptions.
● Nearly One-third of the export business contributes the topline and can be affected if the company fails to grow business in its overseas market.
● Their business is more dependent on Employees, retaining qualified and skilled professionals can be at risk for their business and can affect if not maintained.
● Dental Network’s lack of long-term purchase orders or commitments can increase pricing pressure and harm their business.
Laxmi Dental’s Promoters
The promoters of Laxmi Dental are Rajesh Vrajlal Khakhar, Sameer Kamlesh Merchant, and Dharmesh Bhupendra Dattani.
The Selling Shareholders in this IPO
The selling shareholders in the IPO include Rajesh Vrajlal Khakhar, Sameer Kamlesh Merchant, OrbiMedAsia II Mauritius Limited, Jigna Rajesh Khakhar, Hasmukh Vrajlal Khakhar, Amrish Mahendrabhai Desai, Parag Jamnadas Bhimjiyani and Kunal Kamlesh Merchant.
Laxmi Dental’s Lead Managers
The lead managers for the IPO are Nuvama Wealth Management Limited, SBI Capital Markets Limited, and Motilal Oswal Investment Advisors Limited. MUFG Intime India Private Limited (formerly known as Link Intime India Private Limited) is the Registrar of the offer. They are responsible for managing the entire IPO process which includes pricing, marketing, and ensuring compliance with regulatory requirements.
Written by Santhosh
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