Laxmi Dental IPO to open on Monday: 10 key things to know from RHP before you subscribe to ₹698 crore issue

Laxmi Dental IPO: Laxmi Dental’s initial public offering (IPO) is scheduled to kick off for subscription on Monday, January 13, and will remain open until Wednesday, January 15. The company aims to raise ₹698 crore through the offering, which comprises a fresh issue of 0.32 crore shares, aggregating ₹138 crore and an offer for sale (OFS) of 1.31 crore shares, aggregating ₹560.06 crore.

The IPO price band is set at ₹407 to ₹428 per share. Of the total offering, 75% is reserved for Qualified Institutional Buyers (QIBs), 15% for Non-Institutional Investors (NIIs), and 10% for Retail Investors.

Nuvama Wealth Management, Motilal Oswal Investment Advisors, and SBI Capital Markets are the book-running lead managers of the Laxmi Dental IPO, while Link Intime India Private Ltd is the registrar for the issue.

Retail investors can apply for a minimum of 33 shares in one lot and in multiples thereafter. At the upper end of the IPO price band ( ₹428), retail investors are required to make a minimum investment of ₹14,124 per lot.

Let us take a look at some of the key points mentioned in Laxmi Dental’s RHP:

1. About Laxmi Dental

According to the company’s RHP report, Laxmi Dental is India’s only end-to-end integrated dental products company as of March 31, 2024, offering a comprehensive portfolio of dental products.

Its offerings include custom-made crowns and bridges, branded dental products such as clear aligners, thermoforming sheets, aligner-related products as part of aligner solutions, and pediatric dental products.

2. Second-largest player in domestic laboratory

According to the F&S Report cited in the RHP, the company is among the top two largest dental laboratories in India by revenue for fiscal 2023, catering to both domestic and international markets, including the USA, UK, and Europe.

Among Indian dental labs, the company is the largest exporter in terms of export revenue for fiscal 2023, specialising in custom-made dental prostheses, primarily serving the US and UK markets. It is also the preferred partner for one of the largest Dental Service Organizations (DSOs) in the USA, with over 1,650 clinics.

With a presence of 20 years in the dental laboratory business, the company serves over 20,000 dental clinics, dental companies, and dentists between Fiscal 2022 and 2024.

3. Market Opportunity

Laboratory Offerings: The Indian dental laboratories market is characterised by fragmented, unorganised dental labs with fewer than ten technicians and a lack of quality management standard-compliant dental products.

According to the F&S Report, the Indian market for custom-made crowns and bridges is projected to grow from USD 1.4 billion in 2023 to USD 3.1 billion by 2030, at a compound annual growth rate (CAGR) of 11.8%. This growth rate exceeds that of the global market, which is estimated to grow from USD 71 billion in 2023 to USD 121.6 billion by 2030, at a CAGR of 8%.

Aligner Solutions: The Indian clear aligner market is expected to grow from USD 133.6 million in 2023 to USD 569 million by 2030, with a CAGR of 23.0%. This rate is significantly higher than the global market, which is expected to grow from USD 20.7 billion in 2023 to USD 54.9 billion by 2030, at a CAGR of 15%.

An increasing number of patients are opting for clear aligner treatment over traditional braces for malocclusion, which refers to misalignment of the upper and/or lower teeth, interfering with the person’s ability to bite properly.

Pediatric Dental Products: The Indian pediatric dental crown market is projected to grow from USD 63.9 million in 2023 to USD 164.8 million by 2030, with a CAGR of 14.5%. In comparison, the global market is expected to grow from USD 2.1 billion in 2023 to USD 3.5 billion by 2030, at a CAGR of 7.5%.

The company entered the pediatric dental market through its jointly controlled entity, Kids-E-Dental LLP, by acquiring a 60% stake in 2021.

4. Metal-free products account for major revenue

Primary dental products offered by the company’s laboratory include custom-made dental prostheses such as metal-free crowns and bridges, including its range of branded premium zirconia crowns and bridges, “Illusion Zirconia,” porcelain-fused-to-metal (PFM) crowns, bridges, and dentures.

Metal-free products contributed 53.7% of the total revenue from its dental laboratory business catering to the Indian market and 36.31% of the total revenue from its international dental laboratory business in fiscal 2024.

In FY24, 64.75% of the company’s revenue came from the laboratory segment, while 28.12% came from the aligner solutions segment.

5. Sales growth

In FY24, the company sold 241,832 units of metal-free products, a significant increase from 192,513 units in FY23 and 156,786 units in FY22. 

Additionally, the company sold 374,689 aligners in FY24, a sharp rise compared to 60,539 units sold in FY22. Similarly, it sold 372,885 units of crown products in FY24, a remarkable improvement from 12,741 units sold in FY22.

6. Manufacturing facilities

As of March 31, 2024, the company has six manufacturing facilities, three of which are located in Mira Road, Mumbai Metropolitan Region, Maharashtra, two in Boisar, Mumbai Metropolitan Region, Maharashtra, and one in Kochi, Kerala, and further five supporting facilities two of which are located in Mumbai, and one each in Delhi, Bengaluru, and Ahmedabad with manufacturing capabilities, as per the RHP.

7. Financials

Revenue from operations increased by 19.75% to ₹1,935.55 million in FY24, up from ₹1,616.31 million in FY23. This growth was primarily driven by an increase in sales of branded dental products and laboratory offerings.

Revenue from dental products and related services rose to ₹1,850.48 million in FY24, compared to ₹1,531.96 million in FY23, while revenue from dental clinical services increased to ₹64.02 million from ₹57.45 million during the same period.

Export revenue accounted for 32.54% in FY24, with the largest revenue coming from the US, accounting for 19.41%. The company’s profit for the year grew to ₹252.29 million in FY24, from a loss of ₹41.63 million in FY23.

8. Key Risks

Dependence on Dental Network Expansion: The company’s success relies heavily on expanding its dental network and increasing the wallet share per dental clinic, dental company, and dentist. Failure to achieve this in a cost-effective manner could significantly impact its business, operational results, and financial condition.

Geographic Concentration Risk: All the company’s major manufacturing facilities are situated in and around Mumbai. Any disruptions in the region, such as natural disasters, labour strikes, or infrastructure issues, could severely affect its business operations, financial standing, and results.

International Market Exposure: Exports constitute a significant portion of the company’s revenues. A failure to effectively manage its business in international markets or an inability to expand into new geographic regions may hinder its growth prospects.

9. Objectives of the Issue

The company proposes to utilise the net proceeds from the fresh issue toward the repayment/prepayment, in full or in part, of certain outstanding borrowings, investment in certain subsidiaries for the repayment/prepayment of outstanding borrowings, funding capital expenditure for purchasing new machinery, and general corporate purposes.

10. Allotment and listing details

The allotment of shares for the Laxmi Dental IPO is expected to be finalised on Thursday, January 16, 2025. Tentative listing on both the BSE and NSE is scheduled for Monday, January 20, 2025.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.