Laxmi Organics jumps 10% after strong performance in Q1

Laxmi Organics jumps 10% after strong performance in Q1

New Delhi: Shares of Laxmi Organics soared 10 per cent in early trade on Tuesday after the company reported strong performance in June 2021 quarter.The specialty chemicals producer reported a 435 per cent jump in net profit to Rs 98.68 crore in the quarter ended on June 30, 2021, the regulatory filing said. The company had reported a net profit of Rs 18.45 crore in the year ago quarter.On a sequential basis, net profit jumped 215 per cent from Rs 31.23 crore in March 2021 quarter.Shares of recently-listed Laxmi Organics surged 10 per cent to Rs 299.50 on Tuesday. The scrip was trading at Rs 292.70 at 10 am. BSE Sensex was trading 238.46 points, or 0.44 per cent, higher at 54,641.31.The company reported almost double income from operation to Rs 689.72 crore in Q1 FY2022, as against 354.67 crore in the same quarter previous fiscal. On a QoQ basis, the revenue rose 48 per cent from Rs 467.44 crore.Listed in March 2021, Laxmi Organics sold its shares at Rs 130 apiece during the IPO. The counter has gained about 131 per cent over its issue price.

IPO investors get 2.6 times return in 5 months in this chemical stock. Should you buy?

Multibagger stock: In the year 2021, a good number of stocks have doubled their shareholders' money. However, for surprise to the market observers, this list of multibagger stocks in 2021 include public issues listed this year. Laxmi Organics is one such public issue. The specialty chemical maker company shares were offered at issue price of ₹129 to ₹130 and it got listed on both BSE and NSE on 25th March 2021. It listed on NSE at ₹155.50 per equity share while on BSE it listed at ₹156.20 per equity share. So, to those investors who hold the counter till date, the chemical stock has given around 2.6 times return (current share price of ₹409/listing price of near ₹156) in just 5 months. According to stock market experts, the stock is expected to continue giving smart returns beating the benchmark indices in future too. They advised investors to buy this chemical stock for long-term.

Speaking on the strong fundamentals that will continue to fuel Laxmi Organics share price rally; Avinash Gorakshkar, Head of Research at Profitmart Securities said, “The company deals in Acetyl Intermediates (AI) and Specialty Intermediates (SI) where it works at around 20 per cent margin and it holds around 30 per cent market share. This got reflected in its Q1FY2021-22 results as well, when it reported ₹102 crore quarterly profits, which is just ₹25 crore lower from its FY21 profit of ₹127 crore. Apart from this, the company has order book completely full to its capacity for next one to one and half years, which means its profit is expected remain in this ₹100 crore per quarter levels.”

Avinash Gorakshkar of Profitmart Securities went on to add, “When Laxmi Organics IPO was launched, there was lack of awareness in regard to the company. But, after the successful listing of the Laxmi Organics shares, people started paying attention to the company and its financials. I would advise investors to add this stock in one’s portfolio for long-term, say one and half to two years.”

Unveiling important levels in regard to Laxmi Organics shares; Sumeet Bagadia, Executive Director at Choice Broking said, “Laxmi Organics stock looks strong on chart and one can buy and hold the counter for long. I would advise investors to buy this chemical counter for immediate target of ₹425 to ₹440 maintaining stop loss at ₹380. After breaking this hurdle of ₹440, it may go on to hit ₹480 to ₹500 in next two months.”

Rahul Sharma, Co-Founder at Equity99 said, “Laxmi Organic is fundamentally very strong with an ROE of 17.4 per cent & ROCE of 20. per cent. The company is almost debt-free with a DE ratio of 0.14. So we consider Laxmi Organics a good bet for the Long term, however, we don`t recommend buying at current levels as the stock has rallied almost 52 per cent in 12 sessions. We suggested Buy on dips strategy on this counter for good long-term returns. Our target for the next 6 to 9 months is ₹600 and stop loss is 325.”

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Anti-dumping duty on arylides: Notification issued! Anil Singhvi says BIG news for Laxmi Organic, only company to manufacture the chemical - Check share target

Anil Singhvi, Managing Editor at Zee Business, on Monday said that the Government of India has issued a notification that will go on a long way in helping Laxmi Organic. In line with the notification, the Directorate General of Trade Remedies (DGTR) has recommended imposing anti-dumping duty on arylides coming from China.

The Market Guru said that the only company manufacturing arylides in India is Laxmi Organic, hence it is a big news for the company. He also said that the DGTR has suggested to impose the anti-dumping duty in the range of 24 to 44 percent.

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Chetan Bhutani, Special Correspondent at Zee Business, said that DGTR on behalf of the Government of India has issued a formal notification. He said that it is a big news for Laxmi Organic because in the formal order it was mentioned that the company holds 90 percent of the market hold in this particular product and the demand of the product is so high that sometimes the company is not able to meet it.

The government in its notification has also said that Laxmi Organic should do expansion in order to increase the demand of its product, Chetan added.

He said that Laxmi Organic is a good company as the duty which has been recommended is between the CIF value of 24 to 44 percent and arylides are used in the manufacturing of yellow pigments.

Explaining further, he said that the yellow pigments are the chemicals which are used in every day’s work like in the construction equipment manufacturing, in vehicles, etc.

Chetan said that in the coming time the Department of Revenue of Ministry of Finance will definitely issue a formal order in this regard.

While speaking on the shares of the company, Anil Singhvi said that this stock has always been in radar and after listing the shares of the company has shown a good action.

Sumeet Bagadia has suggested investors to hold their position in the stock as it is showing great momentum. He said that the company can give a level of Rs 390-400.