Laxmi Organic makes decent debut, lists at 20% premium over issue price

Shares of Laxmi Organic Industries made a healthy debut on the bourses on Thursday as they got listed at Rs 156.20, a 20 per cent premium over its issue price of Rs 130 per share on the BSE. Meanwhile, on the National Stock Exchange (NSE), the stock opened at Rs 155.50 against the issue price.

Post listing, the stock of the speciality chemicals company hit a high of Rs 162.05 and a low of Rs 143 on the BSE. At 10:01 am, it was trading at Rs 152.90, 18 per cent higher over its issue price. In comparison, the S&P BSE Sensex was down 0.86 per cent at 48,758 points.

The initial public offer (IPO) of Laxmi Organic Industries had received a robust response from the investors. The issue was subscribed 107 times, led by institutional and high networth investors. The non-institutional investors’ portion was subscribed nearly 218 times, qualified institutional buyers (QIBs) quota 175 times and retail investors' portion 20 times, the data shows.

Laxmi Organic Industries is a leading manufacturer of acetyl intermediates and speciality intermediates. Its products are currently divided into two broad categories viz. acetyl intermediates and speciality intermediates. Acetyl intermediates include ethyl acetate, acetaldehyde, fuel-grade ethanol and other proprietary solvents while speciality intermediates comprise ketene, diketene derivatives viz. esters, acetic anhydride, amides, arylides and other chemicals.

In an IPO note, analysts at ICICI Securities said that they believe valuations are on the higher side given it is a commodity business. The brokerage firm also believes that the upcoming incremental opportunity from fluorospecialties division for three/four years forward is also largely discounted in the price and thus leaves limited opportunity on the table.

The proceeds from the fresh issue will be used for investment in a wholly-owned subsidiary, Yellowstone Fine Chemicals Private Limited (YFCPL), for part-financing its capital expenditure requirements, funding capital expenditure requirements for expansion of the company’s SI Manufacturing, and funding working capital requirements of the company.