Laxmi Dental IPO: Day 2 Live Updates – Over 10x Subscribed, GMP Signals 33% Listing Gain
The IPO of Laxmi Dental Ltd, a leading player in the dental consumables market, continues to capture attention as it enters its second day of public subscription on January 14, 2025.
The initial public offer (IPO), which opened on January 13, 2025, has already been subscribed more than 8 times by Day 2.
The issue is set to close on January 15, 2025. Below are the key details, including the company’s business, IPO performance, GMP (Grey Market Premium), and expert recommendations.
IPO Overview
Laxmi Dental has priced its IPO in the range of ₹407-428 per share.
The total size of the IPO is ₹698.06 crore, comprising both a fresh issue of ₹138 crore and an Offer for Sale (OFS) of 1.31 crore equity shares worth ₹560.06 crore from promoters and existing shareholders.
The company has already raised ₹314 crore from anchor investors.
IPO Subscription Details
On the second day of bidding (January 14), the Laxmi Dental IPO had been subscribed 8.09 times overall. Here’s how different investor categories have subscribed:
- Qualified Institutional Buyers (QIBs): 0.14 times
- Non-Institutional Investors (NIIs): 17.62 times
- Retail Investors: 17.64 times
The retail investor segment has been particularly strong, signaling confidence in the company’s growth prospects.
Grey Market Premium (GMP)
Laxmi Dental’s Grey Market Premium (GMP) stands at ₹142, indicating a 33% premium over the upper end of the IPO price band of ₹428.
Based on the current GMP, shares are expected to list at ₹570, a potential listing gain of 33%.
Company Overview and Key Strengths
Laxmi Dental, founded in 2004, is one of India’s leading manufacturers of dental consumables and the largest exporter of dental products.
The company’s product portfolio includes zirconia crowns, aligners, bioflex crowns, and other dental solutions.
The company operates six manufacturing facilities across India, with ISO and USFDA certifications ensuring global standards in production.
Key Strengths:
- Market Position: Laxmi Dental is the second-largest player in India’s dental laboratory business and the largest exporter in the segment. The company caters to both domestic and international markets, including the US, with an expanding global presence.
- Vertical Integration: Laxmi Dental offers a vertically integrated business model, from manufacturing to distribution, which allows it to maintain quality control and cost efficiencies.
- Technological Advancements: The company has adopted digital dentistry, which positions it well to meet the growing demand for advanced dental solutions.
- Experienced Management: The management team has over 20 years of experience in the dental industry, adding credibility and expertise to the company’s operations.
IPO Objectives and Utilization of Funds
The proceeds from the IPO will be used for several purposes:
- Debt Repayment: A portion of the funds will be used to reduce outstanding borrowings, helping the company lower its debt burden and improve profitability.
- Capital Expenditure: Laxmi Dental plans to invest in machinery and expand its manufacturing capacities, supporting its long-term growth strategy.
- Subsidiary Investments: Funds will also be directed toward the capital expenditure needs of Bizdent Devices Private Limited, a subsidiary of the company.
- General Corporate Purposes: A part of the funds will be allocated for general corporate requirements.
Financial Performance and Valuation
Laxmi Dental is currently valued at a price-to-earnings (P/E) ratio of 94.6x at the upper end of the price band, based on FY24 earnings.
While the P/E is on the higher side, it reflects the company’s strong growth potential, given its leadership position in the market and expanding export opportunities.
In the first half of FY25, Laxmi Dental posted impressive growth, reporting 60.3% and 95.6% of its FY24 revenue and EBITDA, respectively, indicating substantial performance improvement.
The company has also witnessed a significant margin improvement from 4% in FY22 to 19.5% in 1HFY25, driven by operational efficiencies and a reduction in interest costs.
Growth Prospects and Industry Trends
The dental consumables market is expected to grow at a compound annual growth rate (CAGR) of 10.5%, reaching USD 356.8 billion by 2030.
Emerging economies, particularly India and China, are expected to witness higher growth compared to developed countries.
With increasing awareness about dental health, coupled with rising incomes in India, Laxmi Dental is well-positioned to benefit from this long-term growth trend.
The company’s focus on scaling up its branded product offerings, launching new products, and expanding its dental network will further strengthen its market position.
Moreover, the shift from unorganized to organized dental players, along with increasing demand for digital and metal-free dental products, is expected to drive growth for Laxmi Dental.
Investment Risks
Investors should be aware of certain risks before investing in the Laxmi Dental IPO:
- Financial Volatility: The company has reported a consolidated loss after tax and negative earnings per share (EPS) in FY2023 and FY2022, and it cannot guarantee the avoidance of similar challenges in the future.
- Regulatory Risks: There are outstanding legal proceedings involving the company and its promoters, which could potentially affect its financial performance.
- Dependence on Reputation: The company’s business is highly reliant on its reputation and brand image. Any negative publicity or failure to maintain high-quality standards could adversely affect its prospects.
- Concentration of Manufacturing: A significant portion of the company’s manufacturing facilities is located in the Mumbai Metropolitan Region. Disruptions in this region could impact its operations.
Expert Recommendations
Several brokerage firms have weighed in on the IPO:
- SBI Securities: The firm has highlighted Laxmi Dental’s strong market position as one of the top two dental laboratories in India and its significant growth in exports. They have noted a significant improvement in margins and expect continued growth driven by digital dentistry and increasing demand for dental aesthetics. They recommend subscribing to the IPO with a long-term view.
- Canara Bank Securities: Canara Bank also recommended subscribing to the IPO, emphasizing the company’s robust competitive advantages, including cost-effective aligners, faster delivery times, and a diversified product portfolio. The firm believes that Laxmi Dental’s strong market network and digital adoption position it well for future growth, both in India and internationally.
Laxmi Dental’s IPO is attracting significant attention from investors, with strong subscription levels observed on both Day 1 and Day 2.
The company is well-positioned in the fast-growing dental consumables market, with a strong focus on innovation, digitalization, and expanding its global footprint.
Despite some financial volatility and risks, the company’s growth potential makes it an attractive investment for long-term investors.
If you’re looking for exposure to the growing dental industry, Laxmi Dental’s IPO could be a worthwhile opportunity to consider.