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Dolat Capital Report
Laxmi Organic Industries Ltd.'s Q1 FY24 witnessed healthy QoQ improvement in profitability (Ebitda/profit after tax +27%/+58%).
However, management indicated a challenging Q2 whereby the company is witnessing postponement of deliveries (on weak demand).
Fluorochemicals project severely impacted by cost and time overruns (revised capex at Rs 5.5 billion). Revenue generation to commence only in FY25; asset turns to be sub optimal (less than 0.4 times).
Additional capex of Rs 7.1 billion announced at newly acquired land parcel at Dahej; to be undertaken over next three years across specialties and essentials.
We believe, acetyl intermediates and the specialty intermediates will remain Laxmi Organic's core businesses in the medium term, while fluorochemicals ramp-up will be slow and return on capital employed dilutive in the medium term.
We assume coverage with ‘Sell' rating and SoTP based target price of Rs 225.
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