Laxmi Dental's aligner and export growth drives 1QFY27 earnings beat

Investment View and Key Growth Drivers

In its August 12, 2026 1QFY27 results update, Motilal Oswal Financial Services Ltd. reiterated its Buy recommendation on Laxmi Dental with a target price of Rs 280. The broker views international laboratory traction, a revival in the aligner business and a stronger domestic dentist network as the principal drivers of sustained growth through FY28.

Newly appointed US leadership and additional sales personnel are expected to deepen customer relationships and create further growth levers in international markets. Currency benefits also supported the international business during the quarter.

1QFY27 Financial Performance

Laxmi Dental reported 1QFY27 consolidated revenue of Rs 747 million, up 14 per cent year on year and slightly below Motilal Oswal's estimate of Rs 761 million. EBITDA rose 20.6 per cent year on year to Rs 144 million, 11 per cent above the broker's estimate of Rs 129 million. Adjusted PAT increased 23 per cent year on year to Rs 103 million, 14 per cent above the Rs 90 million estimate.

Gross margin increased 530 basis points year on year to 78.6 per cent, driven by a change in product mix. EBITDA margin expanded 110 basis points year on year to 19.2 per cent, compared with the broker's expectation of 17 per cent. Thus, revenue was in line with estimates, while EBITDA and profit exceeded expectations.

Aligner, Laboratory and Digital Business Momentum

The aligner business grew 27 per cent year on year to Rs 236 million in 1QFY27, with Bizdent and Vedia revenue increasing 28 per cent. Management attributed the momentum to education initiatives and the launch of iScope, and expects the growth trajectory to remain sustainable.

The laboratory business rose 13 per cent year on year to Rs 500 million. International laboratory revenue grew 37.5 per cent year on year, while domestic laboratory revenue increased 11.4 per cent. The international laboratory operation has a presence in more than 95 countries, and management plans to enter new geographies each quarter.

Kids E-Dental revenue grew 54.5 per cent year on year to Rs 68 million. Digital penetration in the Indian dental business reached about 75 per cent.

Scanner Sales and Domestic Expansion

Scanner sales remained a weaker area, declining 63 per cent year on year to Rs 22 million, compared with Rs 59 million a year earlier and Rs 82 million sequentially. Scanners accounted for about 3 per cent of revenue.

Despite the near-term weakness, Motilal Oswal considers scanner deployment important for cementing relationships with domestic dentists. Meaningful revenue conversion after scanner application may take six months to one year. Management guided for 800 to 1,000 scanner deployments in FY27 and stated that scanners currently generate an EBITDA margin of 15-20 per cent.

Management expects domestic growth to improve in the coming quarters as satellite laboratories are added to reduce turnaround times. Education, training and other initiatives are intended to offset competitive pressure.

Management Guidance and Capacity Expansion

Management reiterated FY27 revenue growth guidance of 15-20 per cent year on year and EBITDA margin guidance of 18-20 per cent. Average capacity utilisation was about 70 per cent in aligners and 90-95 per cent in laboratories.

Laxmi Dental has acquired land to replace its two leased domestic facilities, which currently entail annual rent of about Rs 20 million, and to create future capacity. Management expects the transition to occur in phases with minimal disruption to revenue or productivity.

Estimates and Valuation

Motilal Oswal broadly maintained its FY26 and FY27 estimates and values Laxmi Dental at 27 times 12-month forward earnings to derive its Rs 280 target price.

The broker's FY26-FY28 estimates imply revenue, EBITDA and adjusted PAT compound annual growth of 18 per cent, 34 per cent and 35 per cent, respectively. By FY28, revenue is expected to reach Rs 3,850 million, EBITDA Rs 788 million and adjusted PAT Rs 567 million.

Risks and Execution Considerations

• Macroeconomic and geopolitical disruption could affect business performance, particularly in international markets.
• Scanner sales remain weak, and the conversion of scanner placements into meaningful revenue may be delayed by six months to one year.
• Competitive pressure remains an execution consideration despite education, training and other initiatives.
• Execution of the new facility transition and satellite-laboratory expansion will be important for maintaining productivity and improving turnaround times.