The initial public offering (IPO) of Laxmi Dental continued to attract a strong response during the second day of the bidding process, thanks to a strong demand from retail and HNI investors. The issue, which kicked off on Monday, January 13, was overall subscribed more than 5 times on day one.
Laxmi Dental is selling its shares in the price band of Rs 401-428 apiece. Investors can apply for a minimum of 33 equity shares and its multiples thereafter. The Mumbai-based company is looking to raise Rs 698.06 crore via IPO, which includes a fresh share sale of Rs 138 crore and an offer-for-sale (OFS) of up to 1.31 crore equity shares worth Rs 560.06 crore.
According to the data, the investors made bids for 9,27,45,279 equity shares, or 10.34 times, compared to the 89,70,371 equity shares offered for the subscription by 1.10 pm on Tuesday, January 14, 2025. The three-day bidding for the issue shall conclude on Wednesday, January 15.
The allocation for retail investors was subscribed 22.21 times, while the portion reserved for non-institutional investors (NIIs) saw a subscription of 22.81 times. However, the quota set aside for qualified institutional bidders (QIBs) was subscribed only 14 per cent as of the same time.
Incorporated in July 2004, Laxmi Dental is an integrated dental products company. It offers custom crowns and bridges, branded dental items like clear aligners and thermoforming sheets, aligner-related products as part of its aligner solutions, and pediatric dental products.
The grey market premium (GMP) of Laxmi Dental has seen some correction following the rising volatility in the broader markets. Last heard, the company was commanding a premium of Rs 140-145 per share in the unofficial market, suggesting a listing pop of over 33 per cent for the investors. The GMP stood around Rs 160, before the bidding for issue kicked-off.
Brokerages are mostly positive on the issue suggesting investors to subscribe to it citing the rising demand for dental health and such products, growth opportunities and rising interest in the organized space for dental solutions. However, rich valuations, a big portion of offer-for-sale (OFS) and competition from the unorganized sector dent the prospects for the issue.
Laxmi Dental shall be benefited by greater demand for general and specialized dental care due to growing awareness. It is demanding a P/E multiple of 93.2 times, based on its FY24 EPS of Rs 4.6, and an EV/sales multiple of 11.7 times, this valuation seems to be fully priced compared to its peers, said Choice Broking.
"It is well-positioned for growth in the coming period, driven by the increasing demand and awareness in the dental care industry, the introduction of new product lines, and the adoption of advanced technologies. However, challenges such as the potential impact of exchange rate fluctuations, reliance on skilled dental technicians, and other risk factors persist," it said with a 'subscribe for long term' rating.
Ahead of its IPO, Laxmi Dental raised Rs 314.13 crore from anchor investors as it finalised allocation of 73.4 lakh equity shares at a price of Rs 428 apiece. Laxmi Dental reported a net profit of Rs 22.74 crore with a revenue of Rs 117.9 crore for the six months ended on September 30, 2024.
The company has reserved 75 per cent of the net offer for the qualified institutional bidders (QIBs), while non-institutional investors (NIIs) will get 15 per cent of the net offer. Retail investors will have the remaining 10 per cent of the share reserved for them. The company will command a total market capitalization more to Rs 2,350 crore.
Laxmi Dental has positioned itself as the only integrated dental products company in India, leveraging a diversified product portfolio to cater to the domestic and international markets, said Ventura Securities. The company is the second-largest player in the domestic laboratory business and the largest export laboratory, with a strong focus on digital dentistry, it said.
"Its vertically integrated approach and cutting-edge technology enable it to provide high-quality solutions, from customized crowns to biocompatible 3D printing resins, ensuring strong differentiation in a competitive landscape," Ventura added with a 'subscribe' rating for the issue.
Nuvama Wealth Management, Motilal Oswal Investment Advisors and SBI Capital Markets are the book running lead managers of the Laxmi Dental IPO, while Link Intime India is the registrar for the issue. Shares of the company shall be listed at both BSE and NSE on January 20, 2025, Monday.