Laxmi Dental Stock Rises as Brokerage Forecasts 38% Upside

Key Takeaways:

• Laxmi Dental shares surge 5% to ₹435.25 after Nuvama assigns a ‘buy’ rating.
• Target price set at ₹570, indicating a 38% upside from the previous close.
• The company focuses on metal-free products and pediatric dental care for growth.
• Revenue projected to grow at a 26% CAGR through FY28, with EBITDA margins improving significantly.
• IPO funds will be used for debt repayment and capital expenditure.

Brokerage Optimism Fuels Market Reaction

Shares of Laxmi Dental witnessed a notable 5% increase in intraday trading on March 26, 2025, reaching ₹435.25 apiece. This upswing followed an initiation of coverage by Nuvama Institutional Equities, which assigned a ‘buy’ rating to the stock. The brokerage also established a target price of ₹570 per share, suggesting a potential 38% upside from the stock’s previous closing level.

Nuvama highlighted Laxmi Dental’s strategic positioning in the dental care market, citing its diverse product portfolio, operational scale, and alignment with industry trends such as digitalization, aesthetic preferences, and rising disposable incomes. These factors are expected to contribute to sustained growth for the company.

Strategic Focus on High-Growth Segments

Laxmi Dental stands out as India’s only fully integrated dental products firm, offering a range of solutions including customized crowns, bridges, aligners, and pediatric products. With a domestic lab network spanning over 22,000 dentists and a leadership position in exports, the company is well-placed to capitalize on the underpenetrated Indian dental care market.

The brokerage emphasized the growing acceptance of metal-free crowns, particularly Laxmi’s branded high-margin offering, ‘Illusion Zirconia,’ which combines durability with aesthetic appeal. Additionally, the aligners segment is gaining traction, driven by increasing consumer focus on aesthetics and advancements like 510(k) clearance. Nuvama projects this segment to grow at a 39% CAGR between FY25E and FY28E.

Pediatric dental care is another key area of focus for Laxmi. Through its exclusive brand, Kids-e-Dental, the company addresses the growing demand for specialized pediatric products. “Kids-e-Dental sales are projected to more than double over FY24–28E,” stated Nuvama, attributing this growth to global expansion plans and ongoing product registrations.

Financial Projections and Growth Drivers

Nuvama anticipates robust financial performance for Laxmi Dental over the next few years. Revenue is projected to grow at a 26% CAGR through FY28, supported by increasing market share and a shift toward higher-margin branded products. EBITDA margins are expected to expand significantly, from 12% in FY24 to 29% in FY28, driven by operating leverage, digital initiatives, and improved product mix.

Adjusted PAT (profit after tax) is forecasted to surge nearly fourfold, growing at a 59% CAGR during FY25E–28E. This growth will be aided by financial deleveraging following the company’s recent IPO. In January 2025, Laxmi raised ₹1.38 billion through its initial public offering, with plans to allocate ₹276 million toward debt repayment and ₹675 million for capital expenditure over the next two years.

Stock Performance and Market Context

Laxmi Dental made its market debut on January 20, 2025, listing at ₹542 per share on the NSE—a 26.64% premium over the issue price of ₹428. Despite a strong start, the stock faced challenges amid market volatility, dropping to ₹313 levels by the end of February. However, the recent endorsement from Nuvama has reignited investor interest, underscoring confidence in the company’s long-term prospects.

As the dental care market continues to evolve, Laxmi Dental’s strategic initiatives and diversified offerings position it as a key player poised for sustained growth. Investors appear optimistic about the company’s ability to leverage emerging opportunities and deliver value in the coming years.