I had gone through latest concall wherein management touched upon briefly on demand scenario from export segment i.e. Europe mainly. But any view based on current situation wherein there could be major disruption on economic activity from these geographies and possible impact on EBIDTA. They have 40% revenue from export in SI segment and which is expected to drive EBIDTA margin compared to AI segment
Stock trading in lower 52 week range currently
Hi Hitesh,
Since your last comment, the speciality chemical companies have correct a lot including Laxmi Organics. I have started tracking this company. Can you please share your views on this company now
I don’t track Laxmi Organics. My comments you quoted were more generic in nature with respect to the whole chemical sector which seemed overheated back in late 2021. Since then most of these fancied chemical stocks have corrected big time or have not moved up much (barring a few speciality chem companies like fluorochem or navin fluorine or some other such specialised companies).
As of now charts of Laxmi organics also does not show too much to be excited about. I prefer to be in sectors that have some tailwinds and that have strong chart formations.
Company declared Sep 2022 quarter results today. Flat revenue and margin continues to remain under pressure.
I was studying this company and it seems like the tide has started turning:
However, the Pitroski score is just 3 which is keeping me away from this stock. Can anyone help me understand? why this stock has such low Pitroski score
How to follow any person.
If you mean how to follow someone on the VP forum, you can check @basumallick posts on his thread. He has outlined a way to do it since the forum has no direct way to follow.
Why the taxes of laxmi is so volatile?
from investing point of view , my opinion
when you calculate laxmi origanic with SIP monthly calculator ,
it is coming negative 16.33 % , which is fair enough as small cap
everyone has their own approach
my opinion , risk is fair enough as small cap
its one decision to stay invested or not
you might be seeing current negative 53% in 5 year chart , but when you compare it to IPO price ,
you will understand the situation , i.e long term situation with the help of technical analysis and charts
thanks ,
Hitesh Gangwani
Disclosure : invested only 10 shares at 434 price ( -42 % on this stock got me to research on this stock for long term )
Co doesnt seem to offer enough risk reward even at these current levels,
Mgt guided for 2x rev, 2.7x ebitda, & capex of 1000cr (fy24-fy28),
assuming dep -200cr, int cost - 20cr, tax - 29%, gives a 400cr PAT by FY28
@25xPE, this results in 10,000cr.
current mkt cap is 8000cr. A 25% appreciation in 4 yrs from current level, if mgt executes perfectly.
not enough risk reward
Lakshmi Organic Industries Limited: Q3 FY25 Earnings Call Highlights
Lakshmi Organic Industries Limited conducted its Q3 FY25 earnings conference call, sharing insights into the company’s performance and future outlook. Below are the key takeaways:
Market and Industry Outlook
• Demand Stability: Key segments such as pharmaceuticals, coatings, printing and packaging, and flavors and fragrances show stable demand. However, the agrochemical segment remains weak.
Raw Materials
• Acetic Acid: Prices moderated to ~$380 per unit in Q3 after last year’s spike. A slight increase to ~$410 is expected in Q4 due to the Chinese New Year.
• Ethyl Acetate: Spreads remain under pressure.
Operational Excellence
• Achieved significant volume growth in essential and specialty verticals through operational efficiency.
• The company is prioritizing core operations while introducing new products, aiming to reduce ethyl acetate’s revenue share from 60% to 40%.
Project Updates
• All projects are on schedule and within budget.
• The Fluoro Intermediate site is projected to contribute:
• 10% of peak revenue in Q4 FY25
• 40-60% of peak revenue by FY26
Financial Performance
• Sales Growth: Increased 13% year-on-year, driven by strong volume growth in the essential business.
• Specialty Business: Expanded 29% due to a better product mix.
• Gross Margins: Improved by 240 basis points.
• EBITDA: Stable at ~₹75 crore.
• Exports: Now account for 36% of total sales, with notable growth in coatings, additives, sealants, and elastomers.
Exports
• Export growth seen across markets like the Americas, Europe, and China, serving large multinational clients.
• A temporary pullback in European exports due to high freight costs is being reconsidered as costs normalize.
Fluoro Intermediates
• Successfully producing products aligned with customer specifications.
• Positioned as a major growth driver for the company.
Margins
• Gross margins declined sequentially from 35.8% to 33.1%, attributed to:
• Higher raw material costs.
• Exchange rate impacts.
• One-time damage costs.
Capex Plans
• Capitalized Assets: ₹220 crore at the Lote site.
• Capex Allocation: ₹1,100 crore planned, including:
• ₹800 crore for the H project.
• ₹90 crore for ethyl acetate.
• ₹50 crore for the Fluoro Intermediate project.
• Sales Projections: Aims to double revenue from ₹2,800 crore to ₹5,600 crore by FY28.
• Fluoro Intermediate Revenue: Expected to generate ₹200 crore in peak revenue.
Sustainability
• Sustainability rating improved from 67% to 87%.
New Appointments
• Dr. Milan V.A.: Now overseeing R&D and marketing.
• Mr. Pratik Singh: To join as CHRO by the end of January 2025.
Power Costs
• Maintained stable power costs despite increased production volumes, thanks to operational efficiencies and lower coal prices.
Chemical Market Dynamics
• Essential Products: Spreads remain in the bottom quartile due to oversupply and stable feedstock prices.
• Specialty Segment: Focused on portfolio enhancement and product performance.
Pricing Outlook
• No significant pricing changes expected post-Chinese New Year, with acetic acid prices anticipated to moderate.
HF Plan
• The company does not plan to invest in an HF facility for backward integration into its fluoro business.
They also mentioned about trippling editda from the current base.
That would be ~ Rs 780 cr ebitda by Fy28
Which is 13-14% ebitda.
Company hasn’t ever done such EBITDA.
Do you have any clarity on this point – how are they going to add 2-3% extra ebitda? Did they mention about this in call?
Not actually, the call doesn’t explicitly detail how they will achieve a specific increase in EBITDA, it emphasises a multi-faceted approach combining volume growth, a shift towards higher-margin products, and improved operational efficiencies across their existing and new production capacities. Additionally, they expect to benefit from a moderation in freight costs and a more stable geopolitical environment.
Now the mcap has come down to ~5000 Cr, 3y to go till FY28. If the same expectations are held on to, the valuation should be 2x in 3y.
Do you think this is a good entry point?
I have only recently started looking at this company, thanks to the rampage in the market, how is the management quality? Any major red flags?
No invested, lurking.
I am sorry I didn’t understand the relevance of the screenshot - I barely see any change from Mar 24. Could you please elaborate?
It was a retrospective question, not a comparison. What I meant to explain is that we should observe in the future whether their CWIP becomes operational, either partially or fully.
