Laxmi Dental IPO debuts at 27% premium; what should investors do now?

After garnering strong response for its initial public offering (IPO), dental care firm Laxmi Dental made a solid debut on the stock market on Monday. The shares of Laxmi Dental listed at ₹542 per share, a premium of 26.64% over the issue price of ₹428 on the NSE. On the BSE, the stock opened 23.36% higher at ₹528 per share, with a market capitalisation of ₹2,902 crore.

Post listing, Laxmi Dental shares touched a high of ₹559.40 on the BSE and ₹553.90 on the NSE, while the market capitalisation climbed to ₹3,039 crore. Meanwhile, the equity benchmarks Sensex and Nifty were trading flat as investors turned jittery ahead of Donald Trump inauguration today, especially his policies and comments on trade tariffs.

What should investors do now?

The listing of Laxmi Dental was broadly in line with Street expectations as the stock was trading with solid gains in the unlisted market, commanding grey market premium (GMP) of ₹145, or 33.9%, over the issue price.

Shivani Nyati, Head of Wealth at Swastika Investmart, recommended investors, who participated in the IPO, to book partial profit. “Those who took part in the initial public offering (IPO) may book part profit and hold with stop loss of ₹480,” she says.

Analyst at Mehta Equities recommended long term investors to consider to ‘Hold’ the stock for long term despite knowing short term volatility post listing and risk in the markets. For conservative allotted investors, it suggested profits booking on listing day, while non-allotted investors advised to accumulate if it dips post listing.

“Despite premium valuations and healthy response, Laxmi Dental listing was healthy in line with our expectations. We believe the investors demand was on the back of the company being India’s only end-to-end integrated dental product company operating in a niche and growing dental solutions space commanding a higher valuation multiple. We believe Laxmi Dental is well-positioned to capture a significant share in the dental solutions space,” says Prashanth Tapse, Senior VP (Research), Mehta Equities.

IPO subscribed 114 times

The ₹698 crore IPO of Mumbai-based dental care firm, which opened for bidding between January 13 and January 15, garnered an overwhelming response from investors, with the issue subscribing 114.14 times. The issue, being offered at a price band at ₹407-428 per share, received bid for over 102.3 crore shares worth ₹43,822 crore as against 89.70 lakh shares on offer. The IPO was booked 5.33 times on Day 1, followed by 16.06 times subscription on the second day of bidding.

The issue was booked 147.7 times in the non-institutional investor (NII) category, followed by 110.38 times in qualified institutional investor (QII) segment. The quota reserved for retail investors was booked 75 times. The company had reserved 75% of the shares in the public issue for QIB, 15% for NII, and remaining 10% for retail investors. The lot size for the IPO was 33 shares and in multiples.

The IPO of Laxmi Dental comprises a fresh issue of equity shares worth ₹138 crore and an offer for sale (OFS) of up to 1.31 crore shares by promoters at pre-IPO market capitalisation of ₹2,352 crore. Under the OFS, promoters Rajesh Vrajlal Khakhar, Sameer Kamlesh Merchant, as well as OrbiMed Asia II Mauritius Ltd pared their stake in the company. The promoters and promoter group entities own a 46.56% stake in the company, while public shareholders hold remaining 53.44% shares.

The company intends to use capital raised from the fresh issue to repay debt, fund capital expenditure, invest in its subsidiary Bizdent Devices Pvt Ltd, and meet general corporate expenses.

Ahead of opening of the IPO, Laxmi Dental raised ₹314 crore from 31 anchor investors by allocating 73.39 lakh shares at the upper end of the price band at ₹428 per share. The marquee investors that participated in the issue include Abu Dhabi Investment Authority, Nomura, Goldman Sachs, Al Mehwar Commercial Investments, Aditya Birla Sun Life Mutual Fund, ICICI Prudential MF, HDFC MF, Kotak MF, Tata MF, Birla Sun Life Insurance, Max Life Insurance, and Natixis Investment Managers.

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