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Industry : Medical Equipment/Supplies/Accessories

Laxmi Dental Limited View all IPOs

Price Band

Rs 407 – Rs 428

Laxmi Dental Limited is going public with a fresh issue an offer for sale. The issue opens on 13th January 2025.

MOJO CALL

Why

Avoid

MOJO CALL

Avoid

Neutral

Highly fragmented market

The Indian dental market is highly fragmented, with small players (1-10 technicians) and medium players (10-200 technicians) controlling the majority of the market, each operating within their local regions. This fragmentation presents challenges for organized players trying to establish a presence in these markets. However, this trend is expected to change, as organized players look to capture market share by scaling their operations and leveraging the latest technologies.

Vertically integrated operations

The company is fully vertically integrated, with end-to-end capabilities spanning from raw materials to distribution, allowing for extensive control over the supply chain. It is also among the select few manufacturers and suppliers of thermoforming sheets, thermoforming machines, dental consumables, and biocompatible resins for 3D printing.

Improving sales from branded products

The company offers a range of products, including crowns and bridges, aligners, thermoforming sheets and machines, and biocompatible resins, under brands such as Illusion Zirconia, Illusion Aligners, and Taglus. These brands have demonstrated strong performance over the years, with their contribution to total revenue increasing from 17.5% in FY2022 to 40.4% in the first half of FY2025.

Valuations

Based on the annualized FY2025 financials, the company is seeking a P/E of 51.7x and a market cap-to-sales ratio of 10x. These valuations are comparable to Prevest Denpro, a listed SME player currently trading at a P/E of 44x. Given the highly fragmented market for dental products and relatively smaller operations of the company, we recommend avoiding this issue.

Issue Details

Issue Opens	13th January 2025
Issue Closes	15th January 2025
Price Band	Rs 407 – Rs 428
Issue size (Upper Band)	Rs. 698.06 Cr
Issue Type	FRESH ISSUE & OFFER FOR SALE
Market cap (based on upper band)	Rs. 2352.38 Cr
Sales- March 2024 (Rs./Crs)	193.56 Cr
Net Profit - March 2024 (Rs./Crs)	25.23 Cr
Industry	Medical Equipment/Supplies/Accessories
Promoters	RAJESH VRAJLAL KHAKHAR, SAMEER KAMLESH MERCHANT AND DHARMESH BHUPENDRA DATTANI
Lead Manager	Nuvama Wealth Management, Motilal Oswal Investment Advisors and SBI Capitals

Objective of the Issue

Details

Objectives of the Issue Fresh Issue – Rs 138 cr & Offer for sale – Rs 560.06 cr

The Objectives of the Offer are for:
1. Repayment/prepayment, in full or in part, of certain outstanding borrowings availed by the company – Rs 22.98 crore
2. Investment in certain subsidiaries for the repayment/ prepayment, in full or in part, of certain outstanding borrowings – Rs 4.60 crore
3. Funding the capital expenditure requirements of the company for purchase of new machinery - Rs 43.51 crore
4. Investment in a subsidiary, Bizdent Devices Private Limited, for the capital expenditure requirements for the purchase of new machinery – Rs 25 crore
5. General corporate purposes – Rs 41.91 crore

List of Shareholders Selling Their Stake

Name	Type	Value of Shares (in Rs)	% of OFS
Rajesh Vrajlal Khakhar	Promoter	8,41,46,512	2%
Sameer Kamlesh Merchant	Promoter	18,60,07,944	3%
OrbiMed Asia II Mauritius Limited	Institutional Investor	4,97,09,06,276	89%
Jigna Rajesh Khakhar	Individual Investor	10,26,50,664	2%
Hasmukh Vrajlal Khakhar	Individual Investor	6,42,17,120	1%
Amrish Mahendrabhai Desai	Individual Investor	6,42,17,120	1%
Parag Jamnadas Bhimjiyani	Individual Investor	6,42,17,120	1%
Kunal Kamlesh Merchant	Individual Investor	6,42,17,120	1%

Business Operations

About Company

Laxmi Dental is engaged in the manufacturing and sale of dental products including custom-made crowns and bridges, clear aligners, thermoforming sheets and other aligner related products.

Based on the revenues for FY2024, the company was amongst the top-2 largest dental laboratories in the country. The company is also one of the leading exporter for custom-made dental prosthesis, catering primarily to US and UK.

The company has a strong focus on increasing its market share in the country’s aligner market. The company sells aligners under its brand “Illusion Aligners”.

As of 30th September 2024, the company operated 6 manufacturing facilities, 3 of which are located in Mira Road, Mumbai, 2 are located in Boisar, Maharashtra and 1 in Kochi, Kerala.

Segment Revenue Breakup

Revenue Breakdown by Segment:
Segment	H1 FY2025	FY2024	FY2023	FY2022
Laboratory	61%	65%	66%	72%
Aligner Solutions	31%	28%	21%	18%
Others	6%	7%	12%	10%

Financials

Financial Overview

The company’s revenue grew by 41% between FY2022 and FY2024 and stood at Rs 193.6 crore for FY2024. For H1FY2025, the revenues stood at Rs 116.8 crore.

In FY2024, the company’s Return on Net Worth stood at 78.8%, significantly up from (19.6%) and (60.5%) recorded in FY2023 and FY2022, respectively.

For H1 FY2025, operating margins for the company stood at 23.96%, up from 16.88% and 5.92% recorded in FY2024 and FY2023, respectively.

Consequently, profit margins for H1 FY2025 stood at 19.47%, up from 13.03% and (2.58%) recorded in FY2024 and FY2023, respectively.

The company has been able to generate positive cash flow from operations in the previous year. The company reported a CFO of Rs 8.15 crore in FY2024. For H1 FY2025, company generated a CFO of Rs 1.4 crore.

As of 30th September 2024, the company had debt (incl. lease liabilities) of Rs 46.96 crore.

Financial Performance (Rs/crore)

Rs./Crs	H1 FY25	FY 24	FY 23	FY 22
Revenue	116.78	193.56	161.63	136.84
Net Profit	22.74	25.23	-4.16	-18.68