Laxmi Dental IPO Day 2 highlights: Issue subscribed 16.03 times on second day. Check GMP, review, other key details

At the end of the second day of bidding on Tuesday, Laxmi Dental IPI was subscribed 16.03 times. The NII portion was booked the most at 37.41 times, followed by the retail portion that saw 29.51 times bids. The QIB portion was not fully subscribed at the end of the second day, garnering 0.84 times bids.

The Global Dental Consumables Market was valued at USD 177.4 bn in CY23 and is forecasted to grow at a CAGR of 10.5% between CY23-CY30F to reach USD 356.8 bn by CY30F, driven by increased awareness and adoption of dental products such as clear aligners & dental crowns in emerging economies such as China, India, and Brazil.

The Indian custom-made Crown & Bridges Market stood at USD 1.4 bn in CY23 and is forecasted to grow at a CAGR of 11.8% between CY23-CY30F to reach USD 3.1 bn by CY30F. The growth will likely be driven by growing adoption of dental treatments, aging population, need for restorative treatments, increasing prevalence of periodontal disease & tooth decay, and introduction of biocompatible and metal-free materials such as zirconia and all-ceramic crowns offering improved aesthetics and long-lasting dental restorations.

Nuvama Wealth Management, Motilal Oswal Investment Advisors and SBI Capital Markets are the book-running lead managers while MUFG Intime India is the registrar.

Laxmi Dental IPO was subscribed 14.26 times so far on second day of the bidding process on Tuesday. QIB portion was booked 0.51 times, NII portion 32.73 times and the retail portion 27.87 times

Rajesh Vrajlal Khakhar, Promoter, Chairperson, and Whole-Time Director, manages business partnerships with international customers and oversees business development. With over 30 years of experience, he is also a director at Bizdent Devices Private Limited. He received the ICONS 2020-2021 certificate from The Economic Times for exceptional service in dentistry.

Sameer Kamlesh Merchant, Promoter, Managing Director, and CEO, is responsible for the company’s overall strategy, operations, and financial performance. With more than 20 years of experience, he also leads digital initiatives and technology transformation. He has received several accolades, including the ICONS certificate from The Economic Times in 2020-21 for his contribution to dentistry.

Sumona Chakraborty, Non-Executive Director (Nominee), is a nominee of OrbiMed Asia II Mauritius Limited. She holds a B.Tech in Biotechnology and a post-graduate diploma in finance. With over 10 years of experience, she has previously worked with Avendus Capital, Equirus Capital, and Verity Knowledge Solutions.

Rajesh Shashikant Dalal, Non-Executive, Independent Director, holds a B.Tech in Mechanical Engineering from IIT Madras and has over 34 years of experience. He has previously worked with OrbiMed Advisors and Johnson & Johnson.

Anjana Rajendra Grewal, Non-Executive, Independent Director, holds a Ph.D. in Arts and has over 23 years of experience. She is a Professor at SDA Bocconi Asia Center and has previously worked with Birla Sun Life Insurance, Global Trust Bank, ANZ Grindlays Bank, and Colgate-Palmolive.

Devesh Ghanshyam Chawla, Non-Executive, Independent Director, holds a degree in Computer Engineering and an MBA in Insurance and Finance. With over 15 years of experience, he has worked with Client Associated and Universal Sompo General Insurance. He has received awards for professional achievements and social contributions.

• Basis of Allotment for the IPO is set for January 16, 2025.
• Refunds will be initiated on January 17, 2025.
• Shares will be credited to Demat accounts on January 17, 2025.
• IPO will be listed on January 20, 2025.

As of the date of the Red Herring Prospectus, the Promoters of the company collectively hold 18,726,178 equity shares with a face value of ₹2, representing 36.19% of the pre-Offer issued, subscribed, and paid-up equity share capital.

The IPO of Laxmi Dental was subscribed 11.7 times on the second day of the bidding process on Tuesday. The QIB portion was booked just 0.44 times while the NII portion was subscribed 24.42 times and the retail portion was booked 23.88 times.

As of September 30, 2024, the company operates six manufacturing facilities. Three of these are located in Mira Road, Mumbai Metropolitan Region, Maharashtra; two in Boisar, Mumbai Metropolitan Region, Maharashtra; and one in Kochi, Kerala. Additionally, the company has five supporting facilities, two of which are located in Mumbai, and one each in Delhi, Bengaluru, and Ahmedabad, all with manufacturing capabilities.

The six manufacturing facilities span a cumulative area of 147,029.63 square feet. The manufacturing facilities in Boisar and one of the Mira Road facilities are registered with the US FDA, and all manufacturing facilities in Mira Road and Boisar are ISO (International Organization for Standardization) certified.

The company has also obtained registration from ANVISA, the Brazilian health regulatory agency, for its thermoforming sheets. Moreover, its laboratory catering to external markets is registered as a 100% export-oriented unit with the Santacruz Electronics Export Processing Zone, a special economic zone that offers import duty benefits.

• Deepen market penetration amongst the existing Dental Network while also expanding the network.
• Continue to scale up branded product offerings.
• Undertake product enhancements of existing dental products and launch new dental products.
• Enhance manufacturing capacities with an increasing focus on automation and the adoption of new technologies.
• Continue to follow a multi-channel approach in marketing.

Laxmi Dental Ltd is valued at a FY24 P/E of 94.6x at the upper end of the price band on post-issue capital. During 1HFY25, the company has already reported 60.3%/95.6% of its FY24 Revenue/EBITDA respectively, implying marked improvement in performance. The company is among the top 2 dental labs by revenue in India and the largest exporter of dental products. Going forward, factors such as the shift from the unorganized to the organized segment, greater awareness and adoption of dental aesthetics, and the shift towards metal-free products are likely to drive growth for the company.

LDL has witnessed margin improvement from 4.0% in FY22 to 19.5% in 1HFY25, driven by operational efficiencies. Reduction in interest cost following debt repayment is likely to improve profitability further.

The company’s key strengths include:

• Being the only integrated dental products company in India, well-positioned to capture industry tailwinds.
• Holding the position of the second-largest player in the domestic laboratory business and the largest export laboratory, with increasing adoption of digital dentistry.
• A vertically integrated, diverse branded product portfolio.
• A large dental network, providing a competitive advantage in the market.
• Robust, technologically advanced capabilities with stringent regulatory compliance, ensuring high-quality standards.
• An experienced management team with significant industry experience.

Laxmi Dental Limited was originally incorporated as ‘Laxmi Dental Export Private Limited’ as a private limited company under the Companies Act, 1956, with a certificate of incorporation issued on July 8, 2004, by the Assistant Registrar of Companies, Maharashtra at Mumbai.

Following a special resolution passed at an extraordinary general meeting of the shareholders on June 18, 2024, the company’s name was changed to ‘Laxmi Dental Private Limited’. A fresh certificate of incorporation was issued by the Registrar of Companies (RoC) on July 24, 2024, and the company was subsequently converted into a public limited company.

As part of further restructuring, the company’s name was changed to ‘Laxmi Dental Limited’, with a new certificate of incorporation issued by the RoC on August 2, 2024.

The global dental consumables market is expected to grow at a CAGR of 10.5% from USD 177.4 billion in 2023 to USD 356.8 billion in 2030, and emerging countries such as India and China are expected to witness higher growth compared to developed countries. While there is a huge opportunity in dental laboratories market in India, survival of new entrants and small players is a challenge due to long gestation to establish a trusted network of dentists, high cost associated with the dental equipment and materials, labor shortage, rising costs, and increasing automation. The dental laboratories market in India is highly fragmented and very few laboratories have adopted digital dentistry and operate at scale, catering to a large network of dentists in domestic as well as export markets. 

Laxmi Dental Limited is one of the leading player in dental consumable market plans to deepen penetration amongst existing Dental Network while also expanding Dental Network to the other regions. The company is one of the very few organized players in dental laboratories segment having sufficient scale of operations, following quality standards, and catering to both domestic and international markets. The company continues to scale up branded product offerings and undertake product enhancements of existing dental products and launch new dental products. Investors looking to invest can invest in the IPO for the long term.

Laxmi Dental IPO was subscribed 8.09 times on the second day of the issue so far. Here's how different quotas were subscribed:

QIB: 0.14 times

NII: 17.62 times

Retail: 17.64 times

• Risks associated with the Company reporting a consolidated loss after tax, negative earnings per share for Fiscal Years 2023 and 2022, and written-off assets in the last three fiscals. The Company cannot assure that it will not experience similar events in the future.
• Risks associated with the Statutory Auditors, including an emphasis of matter in their auditor’s report on the audited financial statements for the Financial Years 2024 and 2023.
• Expansion of the Company's Dental Network and increasing the wallet share per dental clinic, dental company, and dentist. Failure to achieve this in a cost-effective manner could adversely affect the business, results of operations, and financial condition.
• Risks associated with the Company's laboratories business being concentrated in certain jurisdictions. Any loss of business in such regions could adversely affect the business, results of operations, and financial condition.
• Outstanding legal proceedings involving the Company, Subsidiaries, Promoters, and Directors, which may adversely affect the business, financial condition, and results of operations.
• Dependence on the Company's reputation and the perception of its brands. Any negative publicity or harm to the brand, or failure to maintain and enhance brand recognition and quality standards, may materially and adversely affect the reputation, business, results of operations, and financial condition.
• Risks associated with all major manufacturing facilities being located in and around Mumbai. Any disruptions in the region could materially and adversely affect the business, financial condition, and results of operations.
• Imports and exports are material to the Company's business operations. A failure to manage operations in overseas markets or an inability to grow the business in new geographic markets may affect growth and could have a material adverse effect on business, operations, prospects, or financial condition.
• Risks associated with the inability to effectively manage growth or to successfully implement the business plan and growth and expansion strategy, which could adversely affect the business, results of operations, and financial condition.
• Outstanding legal proceedings involving the Promoter, Chairperson, and Whole-time Director. Any adverse decision in such proceedings could have an adverse effect on the business, financial condition, and results of operations.

1. Repayment/prepayment, in full or in part, of certain outstanding borrowings availed by the company.

2. Investment in certain Subsidiaries for the repayment/prepayment, in full or in part, of certain outstanding borrowings.

3. Funding the capital expenditure requirements for purchase of new machinery for our Company.*

4. Investment in subsidiary, Bizdent Devices Private Limited, for the capital expenditure requirements for the purchase of new machinery.*

5. General corporate purposes.

Laxmi Dental Limited, a global leader in the dental industry with 20 years of experience, offers zirconia crowns, aligners, and bioflex crowns, backed by USFDA accreditation. Key competitive advantages include cost-effective aligners, faster delivery times, and backward integration via its Taglus brand. The company is poised to benefit from increasing dental awareness in India and global outsourcing trends, particularly in the U.S. A recent partnership with a major U.S. dental network further enhances growth prospects. However, economic sensitivity, competition, and promoter stake dilution are risks that require monitoring.

Financially, the valuation is at the higher end, with a P/E of 89.17x as of FY2024 and an estimated P/E of 48.75x for FY2025E, suggesting fair pricing without direct listed competitors for comparison.

The diversified product portfolio, robust professional network, and digital adoption position the company for sustained domestic and international growth.

We recommend to SUBSCRIBE to this IPO for long-term gains.

Rajesh Vrajlal Khakhar, a Promoter Selling Shareholder, is selling up to 196,604 equity shares of face value ₹2 each, which represents 0.73% of the total shares.

Sameer Kamlesh Merchant, another Promoter Selling Shareholder, is selling up to 434,598 equity shares of face value ₹2 each, representing 0.50% of the total shares.

OrbiMed Asia II Mauritius Limited, an Investor Selling Shareholder, is selling up to 11,614,267 equity shares of face value ₹2 each, which represents 26.12% of the total shares.

Jigna Rajesh Khakhar, an Other Selling Shareholder, is selling up to 239,838 equity shares of face value ₹2 each, representing 0.06% of the total shares.

Hasmukh Vrajlal Khakhar, another Other Selling Shareholder, is selling up to 150,040 equity shares of face value ₹2 each, which represents Nil percentage of the total shares.

Amrish Mahendrabhai Desai, also an Other Selling Shareholder, is selling up to 150,040 equity shares of face value ₹2 each, representing Nil percentage of the total shares.

Parag Jamnadas Bhimjiyani, another Other Selling Shareholder, is selling up to 150,040 equity shares of face value ₹2 each, representing Nil percentage of the total shares.

Kunal Kamlesh Merchant, also an Other Selling Shareholder, is selling up to 150,040 equity shares of face value ₹2 each, which represents 3.33% of the total shares.

Laxmi Dental IPO GMP today at ₹142. This means Laxmi Dental shares are trading ₹142 higher than the IPO price of ₹428. At the prevailing GMP, shares could list at ₹570, a premium of 33% over IPO price.

Laxmi Dental IPO Live: Laxmi Dental IPO has been subscribed 5.30 times on the first day of subscription, January 13. The issue received bids for 4,75,70,655 shares against 89,70,371 shares on offer, according to BSE data. The retail investors category received 12.47 times subscription while the non-institutional investors (NII) category got subscribed 10.87 times. The qualified institutional buyers (QIBs) portion is booked 13%.

Laxmi Dental IPO Live: Laxmi Dental is poised to benefit from increasing dental awareness in India and global outsourcing trends, particularly in the US. Financially, the valuation is at the higher end, with a P/E of 89.17x as of FY2024 and an estimated P/E of 48.75x for FY2025E, suggesting fair pricing without direct listed competitors for comparison. The diversified product portfolio, robust professional network, and digital adoption position the company for sustained domestic and international growth. We recommend SUBSCRIBE to this IPO for long-term gains, Canara Bank Securities said.

Laxmi Dental IPO Live: The initial public offer (IPO) of Laxmi Dental Ltd enters its second day of bidding process today, January 14. Laxmi Dental IPO opened for subscription on Monday, January 13, and will close on Wednesday, January 15. On the first day of the bidding, Laxmi Dental IPO was subscribed 5.30 times.

The initial public offer of Laxmi Dental IPO has been subscribed 5.30 times on the first day of subscription today, at 17:00 IST, as per BSE data.

The initial share sale received bid for 4,75,70,655 shares against 89,70,371 shares on offer, according to BSE.

The portion for retail investors received 12.47 times subscription while the quota for non-institutional investors got subscribed 10.87 times. The qualified institutional buyers (QIBs) part is booked 13%.

Laxmi Dental is well-positioned with planned capex and a strategic shift toward branded products. However, the absence of long-term contracts introduces uncertainty to near-term growth prospects. At a valuation of 93x, the valuation appears expensive. Hence, we assign a "NEUTRAL" rating.

• The company's Promoter, Rajesh Vrajlal Khakhar, faces CBI charges for alleged corruption related to FDI information, posing significant risks to the company’s financial and operational stability if the verdict is adverse.
• The company's success relies on effectively expanding its Dental Network and increasing revenue per dental entity. Failure to do so cost-effectively may adversely affect its financial and operational results.

The company serves a broad range of customers both in India and overseas. The company's customer base primarily consists of:

• Dental clinics

• Dental companies

• Individual dentists

The initial public offer of Laxmi Dental IPO has been subscribed 4.42 times on the first day of subscription today, at 15:54 IST, as per BSE data.

The initial share sale received bid for 3,96,58,707 shares against 89,70,371 shares on offer, according to BSE.

The portion for retail investors received 11.30 times subscription while the quota for non-institutional investors got subscribed 8.43 times. The qualified institutional buyers (QIBs) part is booked 13%.

A significant portion of the company's revenue comes from dental products manufactured at six facilities: Three in Mira Road and two in Boisar, Maharashtra, and one in Kochi, Kerala.

Laxmi Dental stands out as one of the few vertically integrated players globally, with a business model that includes backward integration (manufacturing raw materials) and forward integration (offering treatment planning solutions). The company's vertically integrated approach contributes significantly to its competitive edge by directly controlling sourcing raw materials. Thus, they are positioned to ensure consistency and quality in the production process with end-to-end capabilities from raw material to distribution.

The initial public offer of Laxmi Dental IPO has been subscribed 3.57 times on the first day of subscription today, at 14:39 IST, as per BSE data.

The initial share sale received bid for 3,19,95,051 shares against 89,70,371 shares on offer, according to BSE.

The portion for retail investors received 9.82 times subscription while the quota for non-institutional investors got subscribed 6.52 times. The qualified institutional buyers (QIBs) part is booked 1%.

Tentatively, Laxmi Dental IPO basis of allotment of shares will be finalised on Thursday, January 16, and the company will initiate refunds on Friday, January 17, while the shares will be credited to the demat account of allottees on the same day following refund. Laxmi Dental share price is likely to be listed on BSE and NSE on Monday, January 20.

As of September 2024, Laxmi Dental is among the few vertically integrated players globally and India's only vertically integrated company. The company has been trying to establish ‘Illusion’ as a well-recognized brand. Its established market presence and experience in manufacturing quality products will help it build and scale future brands. The company also operates through a B2B2C model and has established a sizeable dental network of over 22,000 dental clinics, dental companies and dentists. Further, the company has catered to domestic and global demand by selling its products across 320 Indian cities and 95+ countries between FY2022-H1FY25.

The initial public offer of Laxmi Dental IPO has been subscribed 2.71 times on the first day of subscription today, at 13:30 IST, as per BSE data.

The initial share sale received bid for 2,43,12,717 shares against 89,70,371 shares on offer, according to BSE.

The portion for retail investors received 7.95 times subscription while the quota for non-institutional investors got subscribed 4.63 times. The qualified institutional buyers (QIBs) part is yet to be booked.

The issue is valued at a P/E of 89.2x on the upper price band based on FY24 earnings. However, we believe that factors such as the shift from the unorganized to the organized segment, greater awareness and adoption of dental aesthetics and a shift towards metal-free products are likely to drive growth for the company. Therefore, we recommend a SUBSCRIBE rating for the issue.

Economic sensitivity, high product costs, and limited dental insurance coverage (outside the U.S.) pose risks to demand stability and growth. Local competition and the dilution of the promoter’s stake below 50% may affect brand recognition and investor confidence.

Laxmi Dental's laboratory offerings have evolved over 20 years from a team of few members to an integrated dental product company. The laboratory offers custom-made dental prostheses such as metal bridges and crows, including premium crowns (under the 'Illusion Zirconia'), PFM crowns, bridges and dentures. The dental network has a reach of more than 22,000 dental clinics, dental companies and dentists and cater to over 320 cities nationally. 

• Repayment/prepayment, in full or in part, of certain outstanding borrowings availed by the company;
• Investment in Subsidiary, Bizdent Devices Pvt. Ltd, for the capex requirements for the purchase of new machinery;
• Funding the capital expenditure requirements for purchase of new machinery for the Company;
• General corporate purposes.

The initial public offer of Laxmi Dental IPO has been subscribed 1.49 times on the first day of subscription today, at 11:42 IST, as per BSE data.

The initial share sale received bid for 1,34,02,851 shares against 89,70,371 shares on offer, according to BSE.

The portion for retail investors received 4.84 times subscription while the quota for non-institutional investors got subscribed 2.25 times. The qualified institutional buyers (QIBs) part is yet to be booked.

• India's only integrated dental products company is well-positioned to capture industry tailwinds.
• Second largest player in the domestic dental laboratory business

On Thursday, January 16, the Laxmi Dental IPO basis for share allocation is expected to be finalised. On Friday, January 17, the company will begin refunds, and the shares will be credited to the allottees' demat accounts the same day after the refund. On Monday, January 20, Laxmi Dental share price is likely to be listed on the BSE and NSE.

The initial public offer of Laxmi Dental IPO has been subscribed 32% on the first day of subscription today, at 10:24 IST, as per BSE data.

The initial share sale received bid for 30,66,129 shares against 89,70,371 shares on offer, according to BSE.

The portion for retail investors received 1.19 times subscription while the quota for non-institutional investors got subscribed 46%. The qualified institutional buyers (QIBs) part is yet to be booked.

India's dental care services market is estimated to be US$ 3.4 Bn in 2023 and expected to grow at a rate of 12.6% to reach US$ 7.8 Bn in 2030.

 With a P/E of 89.17x as of FY2024 and a projected P/E of 48.75x for FY2025E, the brokerage claims that the value is at the higher end financially, indicating fair pricing without directly listed competitors for comparison. The company is well-positioned for long-term growth both domestically and internationally thanks to its diverse product offering, strong professional network, and digital adoption. For long-term profits, the brokerage advised SUBSCRIBING to this IPO.

 The company has increased the size of its OFS (offer for sale) from 1.28 crore equity shares to around 1.31 crore shares and reduced the amount of its fresh issue from ₹150 crore to ₹138 crore.

 A little more than ₹314 crore has been raised by Laxmi Dental from its anchor investors before its initial share offering for public subscription. A number of companies have received shares in the anchor round, including Abu Dhabi Investment Authority, Nomura, Goldman Sachs, Al Mehwar Commercial Investments, HDFC MF, Kotak MF, Mirae Asset MF, Tata MF, Birla Sunlife Insurance, Max Life Insurance, ICICI Prudential MF, HDFC MF, Aditya Birla Sun Life Mutual Fund (MF), and Natixis Investment Managers.

According to the circular, Laxmi Dental, a Mumbai-based company, has distributed 73.39 lakh shares to 31 entities at a price of ₹428 per equity share, for a total transaction value of ₹314.12 crore.

Laxmi Dental IPO GMP today or grey market premium is +160. This indicates Laxmi Dental share price were trading at a premium of ₹160 in the grey market, according to investorgain.com.

Considering the upper end of the IPO price band and the current premium in the grey market, the estimated listing price of Laxmi Dental share price was indicated at ₹588 apiece, which is 37.38% higher than the IPO price of ₹428.

Grey market activity over the prior three sessions indicates that today's IPO GMP is positive and anticipates a successful listing. According to experts on investorgain.com, the lowest GMP is ₹155, and the maximum is ₹165.

'Grey market premium' indicates investors' readiness to pay more than the issue price.

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision.