Prabhudas Lilladher Downgrades Laxmi Organic Industries, Sets Price Target at Rs 143
Laxmi Organic Industries Reports 3.6% YoY Revenue Growth
Laxmi Organic Industries (LXCHEM) has released its latest research report, highlighting the company's consolidated revenue growth. For the period in question, the company reported a consolidated revenue of Rs7.4 billion, representing a year-over-year (YoY) growth of 3.6% and a quarter-over-quarter (QoQ) growth of 2.3%. The revenue growth was primarily driven by higher price realizations.
Breaking down the revenue segments, the Essentials segment contributed approximately 71% to the total revenue, with a YoY growth of 6.6% and a QoQ growth of 3.9%. The Specialty Chemicals segment, however, recorded a significant 18% degrowth in FY26, primarily due to a product undergoing a regulatory phase-out. The company expects this phase-out to impact its near-term topline performance, as the replacement product has only recently been commercialized.
On a more positive note, the Fluorochemicals segment achieved nearly 40-45% of its peak revenue potential in FY26 and maintains a healthy order book for FY27, with full ramp-up expected in the same year. Additionally, the company successfully commissioned its Ethyl Acetate plant at Lote.
Demand trends for various segments were also reported. Printing & packaging and pharma segments witnessed stable demand during January-February and an improvement in March, while industrial solutions demand remained steady throughout the quarter.
Valuation and Recommendation
At the current market price (CMP), the stock trades at 35x FY28E EPS. Based on a sum-of-the-parts (SOTP) valuation, we value the stock at Rs143/share. In light of this analysis, we maintain our 'Reduce' rating on the stock.
Revenue Growth Comparison
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| Segment | YoY Growth | QoQ Growth |
|---|---|---|
| Essentials | 6.6% | 3.9% |
| Specialty Chemicals | -18% | N/A |
| Fluorochemicals | N/A | N/A |
Note: N/A indicates data not available for the specified segment.
Investor Takeaway
Investors should be cautious about the near-term impact of regulatory phase-out on Laxmi Organic Industries' topline performance.
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