Laxmi Dental Gets 'Buy' As Nuvama Initiates Coverage Citing Strong Growth Potential

Nuvama initiated coverage on Laxmi Dental Ltd., primarily based on its positive positioning to benefit from sector tailwinds. The research firm has a 'buy' rating on the stock with a target price of Rs 570 apiece.

Laxmi is poised to capture a meaningful share of the pie, given its wide portfolio and scale, aided by tailwinds such as preference for aesthetics, digitalisation and rising income, Nuvama said. The balance sheet is turning healthy with the recent fund raise via IPO, facilitating repayment of debts and supporting capex plans, it said.

Laxmi derives 57% of revenue from the laboratory business, both domestic and export. Then about 25% revenue comes in from aligners, including backward integration. Paediatric dental products account for 12% of the revenue. Laxmi is the go-to play to ride the wave in the highly underpenetrated, but fast-growing dental care market, Nuvama said.

Metal-free crowns are gaining acceptance for their durability and aesthetic appeal, and Laxmi is capitalising on this shift, according to the brokerage. The company with its branded high-margin ‘Illusion Zirconia’ is facilitating this shift.

The industry is also moving from physical impressions to digital, with Laxmi’s ‘iScan Pro’ scanner capturing this move in preference. The industry is experiencing a growing adoption of digital dentistry, facilitating faster turnaround times and reduced costs.

This is due to savings in one-way logistics, reduction in rework expenses and employee cost. Laxmi Dental’s digital units are recording consistent growth and penetration, according to the research firm.

The aligners segment, which is reporting rapid adoption, is likely to expand at 39% CAGR over financial years 2025-2028. This growth will be backed by sector tailwinds, such as focus on aesthetics, rising incomes, and a sustainable business model with ‘pay-as-you-go’, Nuvama said.

Laxmi Dental’s Illusion Aligners, launched in 2021, is the first Indian brand to receive 510(k) clearance from the USFDA, highlighted the brokerage. The company holds a competitive advantage through its backward integration. This is via Vedia Solutions, which drives cost reduction and cuts turnaround from four weeks to three days.

Kids-e-Dental is also a vital growth pillar for Laxmi, as this is the sole Indian brand offering exclusive paediatric products, Nuvama noted.

Given its plans to expand its global presence and the registrations underway, the Kids-e-Dental sales are set to more than double by financial year 2028. It has partnered with a global paediatric dental company to distribute its products across 81 countries, further supporting this growth.

Some key risks include the slow ramp-up in aligners, geographic concentration and a pending CBI case, the brokerage said.