Laxmi Organic Share Price Surges 12% After Raising ₹259 Crore via QIP

Laxmi Organic Industries Ltd, a prominent player in the Indian chemical industry, made headlines as its share price surged by more than 12% during Wednesday's trading session. After a successful fundraising, the company raised ₹259.1 crore through a Qualified Institutional Placement (QIP). As per companies filling the Fund Raising Committee of Directors gave the green light for the issuance and allotment of 9,625,579 equity shares to qualified institutional buyers who met the prescribed eligibility criteria. These shares were allotted at a premium of ₹267.20 per equity share, resulting in a total collection of ₹259.1 crore. The QIP offering began on October 5 and concluded on October 10. 

ICICI Mutual Funds secured 48.24% of the offering. Societe Generale, the Turnaround Opportunity Fund, Ashoka India Equity Investment Trust PLC, and Authum Investment & Infrastructure Ltd have acquired ownership stakes of 19.92%, 10.42%, 9.65%, and 7.72%, respectively.

Ambitious Expansion Plans and Capacity Growth

In July, the company's board approved a capital expenditure of ₹710 crores for the establishment of a manufacturing site in Dahej, Gujarat. The initial phase of this new facility is geared towards producing specialty items, including Diketene and Ketene derivatives, essential products such as Esters, Anhydrides, and Aldehydes derivatives.

The planned capacity addition at the Dahej site is, exceeding 1,00,000 tonnes annually, with an anticipated completion timeline of around three years. This expansion project is a response to meet the growing demand of Laxmi Organic Industries' customers, ensuring its continued growth and relevance in the industry.

Financial Performance and Stock Performance

Laxmi Organic Industries reported a 40.9% decline in consolidated net profit for the quarter ending in June 2023, which stood at ₹38.33 crore compared to ₹64.86 crore in the same period of the previous year. The company's net sales for the same quarter also dipped by over 3% to ₹733.58 crore, compared to ₹756.61 crore in the corresponding period of the previous fiscal year.

Laxmi Organic Industries Ltd's stock has been volatile, with a 5% decrease in the last month, despite a 12% jump today. Over six months, it has gained 15%, but on a yearly basis, it's down by 10%. The company had an impressive market debut in 2021, listing at a 20% premium over the issue price.

The ₹600-crore public issue of this specialty chemical manufacturer saw exceptional demand. During the subscription period from March 15 to 17, the issue was oversubscribed by an impressive 106.81 times. This offering consisted of a fresh issue of ₹300 crore and an offer for sale of an equal amount.

A Brief Overview

Laxmi Organic Industries Ltd serves as the flagship entity of the Goenka Group, a conglomerate with diverse interests spanning chemicals, paper, electricity, and education. Within the Indian Acetyls industry, Laxmi Organic Industries has emerged as a key player, boasting an annual production capacity of 120,000 tonnes of Ethyl Acetate and the company annually manufactures 30,000 tonnes of acetaldehyde. Laxmi Organic Industries has expanded its global footprint with a presence in the Netherlands, strategically positioned to provide enhanced services to overseas consumers.

Raising funds and expanding its manufacturing capabilities in Gujarat shows Laxmi Organic's commitment to meeting market demand and ensuring its long-term growth in the competitive chemical industry.