Big smiles amid weak markets: A promising dental services IPO
In this analysis, we take a closer look at Laxmi Dental Ltd and present you with the exclusive IPO details.
About the issue
Laxmi Dental Ltd is preparing to launch its Initial Public Offering (IPO) for equity shares. Below are the issue details.
| IPO Details |
| IPO Opening Date |
January 13, 2025 |
| IPO Closing Date |
January 15, 2025 |
| Issue Type |
Book Built Issue IPO |
| Face Value |
Rs 2 per equity share |
| IPO Price |
Rs 407 to Rs 428 per equity share |
| Min Order Quantity |
33 shares |
| Listing At |
BSE, NSE |
| Total Issue |
1,63,09,766 shares of FV Rs 2* |
| (Aggregating up to Rs 698.06 Cr)* |
| Fresh Issue |
32,24,299 shares of FV Rs 2* |
| (Aggregating up to Rs 138.00 Cr)* |
| Offer for Sale |
1,30,85,467 shares of FV Rs 2* |
| (Aggregating up to Rs 560.06 Cr)* |
| QIB Shares Offered |
75% of the Offer |
| Retail Shares Offered |
10% of the Offer |
| NII (HNI) Shares Offered |
15% of the Offer |
| *At Upper Price Band |
|
Objects of the Issue
The offer encompasses both the fresh issue and the offer for sale. It's important to note that the company will not accrue any proceeds from the offer for sale. The company plans to allocate the net proceeds raised from the fresh issue for the following purposes:
1. Repayment/prepayment, in full or in part, of certain outstanding borrowings availed by the company.
2. Investment in certain subsidiaries for the repayment/prepayment, in full or in part, of certain outstanding borrowings.Funding the capital expenditure requirements for purchasing new machinery for the company.
3. Investment in a subsidiary, Bizdent Devices Pvt Ltd, for the capital expenditure requirements for the purchase of new machinery.
4. General corporate purposes.
Promoter holding
Rajesh Vrajlal Khakhar, Sameer Kamlesh Merchant and Dharmesh Bhupendra Dattani are the promoters of the company. The promoters and promoter group currently hold a pre-issue shareholding stake of 46.56 per cent in the company.
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Company profile
According to the F&S Report, Laxmi Dental Ltd stands out as India’s only fully integrated dental products company as of September 2024, offering a comprehensive portfolio of dental solutions. Its product range includes custom-made crowns and bridges, branded dental products like clear aligners, thermoforming sheets, aligner-related products, and paediatric dental products.
With over 20 years of presence and a reach spanning more than 22,000 dental clinics, dental companies, and dentists between Fiscal 2022 and September 30, 2024, the company ranks among the top two largest Indian dental laboratories.
As of September 30, 2024, the company operates six manufacturing facilities and exports to over 95 countries. The company introduced clear aligners under its brand, Illusion Aligners, which became the first Indian brand to receive 510(k) clearance from the US FDA in 2021 for marketing clear aligners.
Notably, it is one of the few companies in India to manufacture and supply thermoforming sheets, thermoforming machines, dental consumables, and biocompatible resins for 3D printing under its ‘Taglus’ brand, specifically designed for clear aligner production.
Financials
| Rs (in crore) |
FY22 |
FY23 |
FY24 |
H1FY25 |
| Revenue |
138.07 |
163.84 |
195.26 |
117.9 |
| Profit Before Tax |
-14.71 |
-4.26 |
8.52 |
21.1 |
| Net Profit |
-18.68 |
-4.16 |
25.23 |
22.74 |
The company has consistently achieved strong revenue growth over the past few years. However, it faced profitability challenges during FY22 and FY23 but managed to recover from losses and return to profitability. When annualised, the figures from the H1FY25 indicate around 21 per cent revenue growth and an 80 per cent surge in net profit compared to FY24.
Valuation & Returns
The issue is priced with a P/BV ratio of 33 times, calculated using its Net Asset Value (NAV) of Rs 12.97 as of September 30, 2024. Using the company's annualized FY25 earnings and fully diluted equity capital, the price-to-earnings (P/E) ratio is calculated at 49x. The company delivered a robust return on equity (RoE) of 79 per cent and a return on capital employed (RoCE) of 20 per cent for FY24.
In the company’s RHP, it has listed Poly Medicure Ltd as a peer. However, Poly Medicure Ltd operates in distinct segments, primarily serving areas such as oncology, cardiology, urology, respiratory care, dialysis, and blood management. Consequently, it does not serve as an ideal point of comparison.
Outlook
With its niche market focus, the company heavily relies on the dental solutions market, which may limit its diversification potential. Additionally, as dental care is often viewed as discretionary, the ongoing economic slowdown could impact revenue growth.
However, the company’s strengths cannot be overlooked. It is an established brand with a leadership position in dental lab services, supported by a strong network of partner clinics and laboratories. With diversified revenue streams and a proven track record, the management remains optimistic about the company’s long-term prospects.
Considering these factors, we recommend investors subscribe to the issue with a long-term perspective.