Summary
Laxmi Dental Limited - Q3 FY26 Earnings Call Summary Wednesday, February 11, 2026, 09:00 A.M. (IST)
Event Participants
Executives 3 Dharmesh Dattani (CFO), Rajesh Khakhar (Chairperson & Whole-time Director), Sameer Merchant (MD & CEO)
Analysts 6 Akash (Investec), Kamlesh Bagmar (Lotus Asset Managers), Kashish Thakur (Elara Securities), Manjeet Buaria (Saamya Advisors), Sanjay Sood (Individual Investor), Smith Gala (RSPN Ventures)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue from Operations | ₹66.00 crores | +7.1% YoY; Growth tempered by macro headwinds and US tariffs despite being a peak season. |
| Gross Profit | ₹45.90 crores | +6.8% YoY; Margin at 69.5%, slight sequential improvement due to lower contribution from scanner sales. |
| EBITDA | ₹7.00 crores | -13.6% YoY; Margin at 10.6% vs 13.1% in Q3FY25, impacted by 150 bps US tariff hit and ESOPs. |
| Adjusted EBITDA | ₹9.60 crores | Includes 60% Kids-e-Dental PAT, 49% IDBG AI Dent PAT, and ₹1.6 crore ESOP expenses. |
| Profit After Tax (PAT) | ₹2.00 crores | -58.3% YoY; Impacted by a ₹5.8 crore one-time exceptional item for new labor code compliance. |
| Finance Costs | ₹0.30 crores | -80.0% YoY; Sharp decline as the company remains debt-free. |
| Digital Penetration | 79% (Domestic) | Internal metric; significantly higher than the 4-5% industry average for digital dentistry adoption. |
Geographic & Segment Commentary
- International Lab Business: Delivered 25% YoY growth despite 50-55% US tariffs. Management noted a recent breakthrough with US tariffs reduced to 25%, effective February 2026, which is expected to restore competitiveness and volume growth in the US market (20% of total revenue).
- Domestic Lab & Aligner Business: Experienced softness in Q3 due to fewer US NRI visits to India and competitive pricing in the aligner (Bizdent) space. Management implemented “innovative strategies” in Q3, resulting in a healthy demand recovery observed in January 2026.
- Pediatric Dental (Kids-e-Dental): Reported ₹5.9 crore revenue (+7.2% YoY). Focus remains on securing CE certification for the European market to leverage the upcoming EU-India FTA for meaningful acceleration.
Company-Specific & Strategic Commentary
- US-India Trade Relations: The reduction of tariffs from 50%+ to 25% (and potentially 18% in the future) is a major tailwind for profitability. CEO noted that China currently faces 34% tariffs, placing Laxmi Dental in a superior competitive position for US exports.
- Digital Dentistry & Scanners: Scanner sales reached ₹6.4 crore (+46% YoY). Scanners are used as a loss-leader/entry product with volume commitments to lock in recurring lab business and reduce logistics costs (physical impression transport).
- Artificial Intelligence: Soft-launched “AI-Dent” for clinical diagnosis and monitoring. Management is also piloting internal AI tools to enhance manufacturing and design efficiencies for dental prosthetics.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue Growth | 20% - 25% (FY27) | Expected recovery driven by US tariff reductions, EU FTA, and normalized domestic demand. |
| EBITDA Margin | 18% - 20% (Mid-term) | Normalization expected as one-time labor code impacts and high first-year ESOP costs (₹1.6cr) subsidize. |
| Domestic Lab Rev | ~₹24 crore (Q4FY26) | Anticipating a strong exit quarter based on positive January trends and strategic pricing adjustments. |
Risks & Constraints
| Risk | Context |
|---|---|
| Geopolitical & Macro | Volatile US-India trade relations and tariffs previously eroded 150 bps of EBITDA margin. While tariffs have halved, future policy shifts remain a watch-point. |
| Regulatory (Labor Code) | A one-time ₹5.8 crore impact was recorded due to new labor code accounting; management is still evaluating if further provisions are required. |
| Competitive Pricing | The domestic aligner market (Bizdent) faced significant pricing pressure this quarter, although management claims situation is now “trending toward normalcy.” |
Q&A Highlights
US Tariff Clarification
- Question: How does the tariff reduction impact margins and why was Q3 sales soft given it was peak season? (Sanjay Sood, individual)
- Answer: Growth was tempered because 50% tariffs forced the company to let go of price-sensitive US customers. The reduction to 25% (observed Feb 10) provides a “breather” and allows for a 50/50 split of the tariff burden with customers (Sameer Merchant).
Digital Moat vs. Competition
- Question: Does digital dentistry lower the barrier for competition since physical logistics/feet-on-street are no longer an advantage? (Manjeet Buaria, Saamya Advisors)
- Answer: No, because while scanners digitize the input, the output requires expensive CNC machines, 3D printers, and specialized engineers. Smaller “mom-and-pop” labs cannot afford the continuous tech upgrade cycle, leading to industry consolidation (Sameer Merchant).
Margin Discrepancy
- Question: Why did margins fall ~450 bps QoQ despite only a 150 bps tariff hit? (Kamlesh Bagmar, Lotus Asset Managers)
- Answer: Beyond tariffs, margins were impacted by higher ESOP costs, the one-time ₹5.8cr labor code provision, and lower sales-mix contribution from high-margin NRI treatments (Sameer Merchant/Dharmesh Dattani).
Key Takeaway
Laxmi Dental’s Q3 FY26 results reflected a resilient top-line growth of 7.1% YoY to ₹66 crores, though profitability was significantly squeezed by exceptional items and a full quarter of peak US tariffs. The company reported a 10.6% EBITDA margin, weighed down by a ₹5.8 crore labor code provision and ₹1.6 crore in ESOP expenses. Strategically, the firm is pivoting heavily toward digital dentistry, achieving 79% domestic digital penetration and leveraging scanner sales (+46% YoY) to secure long-term lab volume. The outlook is bolstered by the recent halving of US export tariffs from 50% to 25% and the upcoming EU FTA, which management expects will restore EBITDA margins to the 18-20% range and drive 20-25% revenue growth in FY27. Investors should monitor the successful integration of AI diagnostics and the timing of CE certifications for the pediatric segment as key catalysts for international expansion.
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