Laxmi Dental IPO 2025: Subscription, GMP, and More

Laxmi Dental, a leading player in the dental products industry, is currently in the midst of its Initial Public Offering (IPO), which is attracting significant interest. The three-day bidding process for the Laxmi Dental IPO, which began on January 13, 2025, will close today, January 15, 2025. As the IPO draws to a close, investors and market enthusiasts are eagerly watching the subscription status, Grey Market Premium (GMP), and other critical details. In this blog post, we will dive into the key aspects of the Laxmi Dental IPO, including its financials, market outlook, and subscription performance, providing a comprehensive overview of everything you need to know before investing.

Laxmi Dental IPO: Company Overview

Laxmi Dental, founded in 2004 and headquartered in Mumbai, is an integrated dental products company offering a wide range of products such as custom crowns and bridges, clear aligners, thermoforming sheets, pediatric dental products, and other dental-related items. Over the years, the company has established a strong market presence, both domestically and internationally, as one of the few organized players in the dental lab segment.

Laxmi Dental focuses on producing high-quality dental solutions that cater to various needs, from orthodontic to pediatric care. The company’s offerings include not only traditional dental products but also innovative solutions like aligner-related products. Laxmi Dental plans to expand its dental network and increase its market penetration, targeting both established dental networks and new regions.

Laxmi Dental IPO: Key Details

• IPO Price Band: Rs 401-428 per share
• Minimum Application: 33 equity shares, with additional multiples allowed
• Total Issue Size: Rs 698.06 crore
  • Fresh Issue: Rs 138 crore
  • Offer for Sale (OFS): 1.31 crore equity shares worth Rs 560.06 crore
• Market Capitalization Post-IPO: Expected to exceed Rs 2,350 crore

Laxmi Dental’s IPO is offering shares in a price band of Rs 401-428 per share, and investors can apply for a minimum of 33 shares, which is the basic lot size. The total issue size is Rs 698.06 crore, with Rs 138 crore being raised through the fresh issue of shares and the remaining Rs 560.06 crore through the offer for sale (OFS) of existing equity shares.

The IPO’s price band is considered attractive by many investors, but whether it is appropriately priced remains a key question, which we will address later in the article.

Subscription Status: Strong Demand Across All Investor Categories

The Laxmi Dental IPO has witnessed an overwhelmingly positive response from investors. As of 2:50 PM on January 15, 2025, the IPO has been subscribed 81.89 times overall, a remarkable feat for a company in the dental consumable market. Here’s a closer look at the subscription status across various investor categories:

• Non-Institutional Investors (NIIs): Subscribed 130.66 times
• Retail Investors: Subscribed 63.91 times
• Qualified Institutional Bidders (QIBs): Subscribed 63.49 times

Grey Market Premium (GMP): A Key Indicator of Market Sentiment

The Grey Market Premium (GMP) is an unofficial indicator of an IPO’s potential listing gain, reflecting how much premium investors are willing to pay for the stock even before it officially lists on the exchanges. As of now, Laxmi Dental is commanding a GMP of Rs 125-130 per share, signaling a potential 30% listing gain on the upper end of the price band.

However, it’s important to note that the GMP has seen some correction from its earlier levels. Before the bidding began, the GMP stood at around Rs 160, but it has since moderated due to rising market volatility and less enthusiastic demand from QIBs. Despite the correction, the GMP suggests positive sentiment among investors, with a promising listing pop for those who manage to secure shares in the IPO.

Financials of Laxmi Dental

Laxmi Dental’s financials provide an important insight into the company’s performance and growth potential. The company reported a net profit of Rs 22.74 crore for the first half of FY24, with revenue of Rs 117.9 crore during the same period. Over the last three years, the company has delivered a solid average earnings per share (EPS) of Rs 1.55.

Despite its strong financials, the company faces challenges due to high valuations, especially considering its price-to-earnings (P/E) ratio. As per Bajaj Broking, based on its FY25 annualized earnings, Laxmi Dental is priced at a P/E ratio of 64.65 times, which is considered on the higher end for a company in this segment. When looking at FY24 earnings, the P/E ratio rises to a steep 130.87 times, further highlighting the aggressive pricing of the issue.

Additionally, Laxmi Dental is priced at a price-to-book value (P/BV) ratio of 33 based on its net asset value (NAV) of Rs 12.97 as of September 30, 2024. While these high valuations may give some investors pause, brokerages like Motilal Oswal and others have suggested a long-term subscribe rating due to the company’s solid growth potential and the increasing demand for dental health products.

Broker Recommendations

While the Laxmi Dental IPO is priced on the higher side, it has generated positive sentiments from brokerages, which believe that the company’s prospects in the organized dental space are strong. The company’s established brand, commitment to quality, and potential for expansion make it an attractive investment for long-term investors.

Key Factors Driving Positive Sentiment:

• Strong Demand for Dental Products: As dental health awareness increases, the demand for dental products like aligners, crowns, and pediatric dental items is rising.
• Market Positioning: Laxmi Dental is one of the few organized players in the dental lab segment, which gives it a competitive edge over unorganized market players.
• Growth Opportunities: The company plans to expand its reach into new regions and deepen its presence within existing networks, further boosting its revenue and growth prospects.

However, there are a few concerns:

• Aggressive Valuations: The high P/E ratio could limit short-term gains for investors, especially if the market sentiment turns negative.
• OFS Portion: A large portion of the IPO consists of the Offer for Sale (OFS), meaning that existing shareholders are selling their stake, which could limit the scope for new investors to benefit from the company’s growth in the short term.
• Competition from the Unorganized Sector: Despite the company’s scale and quality, competition from the unorganized sector remains a challenge.

Conclusion: Should You Subscribe to Laxmi Dental IPO?

The Laxmi Dental IPO offers a strong growth story in the dental products industry, but with high valuations and aggressive pricing, investors need to carefully evaluate their risk appetite. The company’s impressive market position, expansion plans, and strong financials provide a solid foundation for long-term growth. However, the steep pricing and large OFS portion could limit short-term returns for investors who are looking for immediate gains.

For long-term investors, Laxmi Dental could present an attractive investment opportunity, especially if you are confident in the growth of the organized dental products market. For those looking for short-term gains, it might be prudent to proceed with caution due to the current high valuation.

As always, it is recommended that investors conduct thorough research, consult with financial advisors, and assess their investment goals before deciding to participate in the IPO.

Listing Date: January 20, 2025, at both BSE and NSE.

Happy Investing!