Laxmi Organic lists at 21% premium — and continues to gain amid market volatility

• Laxmi Organic made its debut on the National Stock Exchange (NSE) at a premium of 21.5%.
• The ₹600 crore IPO was subscribed to over 100 times.
• At 10:15am, the share price settled at around ₹158.55 after hitting a low of ₹143.25.

Laxmi Organic, the speciality chemicals manufacturer, made its debut on the stock market today. It got listed at ₹155.50 a share — 21% higher than the IPO issue price of ₹129 to ₹130 per share.

The ₹600 crore IPO, which was subscribed 106.81 times hit a low of ₹143.25 and a high of ₹161.70 within the first ten minutes of trading. At 10:15 am, the price settled at around ₹158.55.

While the opening price was above the slated issue price, it is under the listing premium of 25% to 45% as expected by analysts.

Prior to listing, the company’s shares were trading at ₹182 in the grey market, 21% higher than the IPO price, according to Unlisted Arena.

What has investors excited about Laxmi Organic?
The rally behind Laxmi Organic’s IPO stems from its dominance in the market. The company has been a player in large scale manufacturing of chemicals for over three decades and has been able to capture 30% of India’s ethyl acetate market.

Ethyl acetate is a colourless liquid commonly used in glues, nail polish removers, and in the decaffeination process of tea and coffee.

“Today’s event [the listing] has been an inevitability for Laxmi. Laxmi would have arrived at this point at some point in time” said Partha Roy Chowdhury, the chief financial officer for Laxmi, at the listing.

The company has been the largest exporter of ethyl acetate from India in the six months ending in September 2020. And, since 2012, Laxmi Organic was one of the largest exporters of ethyl acetate to Europe from India.

It's also the only player in the country to make diketene derivatives — used in the making of paper, pharmaceuticals, insecticides and dyes.

With the new inflow of capital, the company plans on setting up a new manufacturing facility for fluoro speciality chemicals in addition to using the funds to meet its working capital requirements and upgrade existing units.

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