This Stock Is A Good Buy After Superb Quarterly Numbers, Future Growth Prospects

Broking firm Anand Rathi is bullish on the stock of Laxmi Organic Industries Limited, which reported a good set of quarterly numbers.

Laxmi Organic Industries: Good Quarterly numbers

The company is a speciality chemical manufacturer, focused on two key business segments which includes Acetyl Intermediaries and Speciality Intermediaries. Laxmi Organic Industries very good quarterly numbers with revenue growth from operation of 97.4% YoY at Rs.8,599 million during Q3-FY22 as against Rs 4,355 million in Q3-FY21.

According to Anand Rathi, both Acetyl Intermediated Business and Specialty Intermediate Business recorded robust growth.

"SI business points towards a consistent improvement of the financial matrices while the acetyl business brings in necessary cash flows to fuel the future growth and the investments," the brokerage said in its report.

EBITDA inches higher

Laxmi Organic Industries company reported EBITDA of Rs 1,187 million in Q3-FY22 as against Rs 677 million in Q3-FY21, growth of 75.4% YoY. EBITDA Margins for Q3-FY22 stood at 13.8%. The management expect the margin to sustain on back of cooling raw material prices. The profit after tax for Q3-FY22 came in at Rs 816 million as against Rs 452 million during Q3-FY21 recording a growth of 80.7% YoY.

"Fluorospecialty Business is expected to begin commercial production during Q3-FY23. The project is facing a delay and cost escalations on account of covid, escalations in the prices of construction materials and logistics challenges. The Company have decided to launch phase II of the Capex to add incremental capacities simultaneously. This will entail an incremental Rs.160 crore Capex as compared to earlier planned capex of Rs.290 crore. The Management expects a turnover of the order of 280 to 300 Crores initially," Anand Rathi has said in its report.

Buy the stock for a target price of Rs 535 per share

According to Anand Rathi, the company has a de-risked business model with diversified customer base and portfolio across industry as well as presence across various geographies. "We expect the growth momentum to continue in the medium term supported by ongoing strong Capex plans. We maintain our Buy rating on the stock with revised target price of Rs 535 per share," the brokerage has said.

Shares of Laxmi Organic Industries was last seen trading at Rs 422 on the NSE.

Disclaimer

Investing in stocks is risky and investors should do their own research before investing. The author and Greynium Information Technologies are not responsible for any losses incurred due to a decision based on the above article. Investors should also exercise due caution as markets are extremely volatile due to geo-political tensions and rising interest rates.