Strong Fundamental Midcap Stock- Laxmi Organic Industries Ltd

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Laxmi Organic Industries Ltd

Laxmi Organic Industries Limited was established in 1989 and is in the business of specialty chemicals. The Company primarily manufactures Ethyl Acetate, Acetic Acid and Diketene Derivative Products (DDP). DDP is a specialty chemical group, the technology and business of which has been acquired by the company from Clariant Chemicals India Limited.
The company’s business operations are carried in over 30 countries including 11 offices located in India

Business Overview:
Laxmi Organic Industries Ltd is primarily a B2B business, currently operating in two verticals namely; Acetyl Intermediates (AI) and Specialty Intermediates (SI). The company is one of the India’s largest manufacturers and exporters of ethyl acetate, with a market share of approximately ~30%. Also, it is India’s only manufacturer of diketene derivatives, with a market share of approximately ~55%.
The upcoming fluorochemicals (FI) vertical is under capitalization.

Product Description:
Acetyl Intermediates (AI): The company’s portfolio comprises 13 products, including ethyl acetate, acetaldehyde, fuel-grade ethanol and other proprietary solvents.
Speciality Intermediates (SI): In this vertical, the company’s portfolio comprises ketene and over 34 diketene derivatives, including esters, acetic anhydride, amides and arylides.
Fluorospeciality Intermediates (FI):The company’s portfolio will comprise over 100 products in R&D and scale-up stage.
Application of Products:
The company caters to industries like pharmaceuticals, agrochemicals, inks and paints, coatings, printing, packaging, adhesives industries, dyes and pigments, flavor and fragrance, aerospace, automobiles, flame retardant industries, etc.

International Presence:
The company’s presence is in over 30 countries including China, Netherlands, Russia, Singapore, UAE, UK and USA through various direct subsidiaries overseas through their offices in 3 international locations. Presently, the company generates ~41% of the total revenue from their international operations.

Manufacturing Infrastructure:
The Company currently has two manufacturing facilities in Mahad, for the production of Acetyl Intermediates and Speciality Intermediates. The Company is in the process of acquiring YCPL and their manufacturing site is also located in Mahad.
The company has two distilleries in Satara and Kolhapur, for the manufacture of ethanol or specially denatured spirit from molasses. The ethanol manufactured at the distilleries is primarily consumed for the manufacture of fuel-grade ethanol, ethyl acetate and certain Specialiy Intermediates.
The Company operates a 3.5 MW hydro-electric plant at Yedgaon and a 1.25 MW wind turbine at Satara at the SI manufacturing site.

Segments & Revenue Generation:
In FY20, the company generated a revenue of Rs. 176 Cr through selling its Products related to Chemicals (~99%) and Coal, Job-work and Others (~1%). This is further bifurcated into-
Pharmaceuticals ~33%
Printing and Packaging ~27%
Agrochemicals ~11%
Color and pigment ~11%
Chemicals ~11%
Others ~7%

Capex and Future Outlook
The Company is in the process of implementing capex worth approximately Rs. 2400 million towards the end of FY21. The capex would be done to enter into the fluorinated chemicals segment by acquiring assets from Miteni SpA (Italy) through its wholly owned subsidiary, Viva Lifesciences Private Limited. The company is setting up a manufacturing facility at Lote Parshuram, for manufacturing fluoro specialities.
Additionally, the company is expanding the installed capacity of diketene derivatives, which would be for the manufacturing of two products, by 4,480MTPA at cost of around INR1,350 million. The company has entered in an agreement with a leading crop science company for one of the products. Moreover, the company is in the process of acquiring another entity owned by the same promoter group, Yellowstone Chemicals Private Limited (YCPL), which is involved in the manufacturing of acetaldehyde and ethyl acetate. The acquisition of YCPL, which is likely to be completed by 3QFY22, will expand LOIL’s acetaldehyde and ethyl acetate capacity by 10,500MTPA and 29,200MTPA, respectively

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Feeling lucky…😎

Got this stock at IPO. Now it valued more than 3x

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