Laxmi Dental Limited — Q3 FY26 earnings call

Call held 11 Feb 2026

Management summary

Laxmi Dental reported a 7.1% YoY revenue growth to INR 66 crores in Q3 FY26, driven by strong international lab and scanner sales, despite a challenging macroeconomic environment and softness in domestic segments. The company's EBITDA margin was 10.6%, impacted by US tariffs and a one-time exceptional charge of INR 5.8 crores. Management is optimistic about Q4 FY26 and FY27, citing reduced US tariffs, EU FTA developments, and strategic initiatives in digital dentistry and product innovation.

Highlights

  • Revenue grew 7.1% YoY to INR 66 crores despite challenging global environment.

  • International lab business delivered robust 25% YoY growth.

  • Scanner sales showed strong 46% YoY growth, reaching INR 6.4 crore.

  • Company is debt-free, leading to significant reduction in finance costs to INR 0.3 crore.

  • US tariffs reduced from 50% to 25%, expected to improve profitability and competitiveness.

Concerns

  • EBITDA margin impacted by 150 bps due to US tariffs, standing at 10.6%.

  • One-time exceptional item of INR 5.8 crores recorded due to new labor code and accounting standard.

  • Domestic lab and aligner (Bizdent) businesses experienced some softness in Q3 FY26 due to competitive pricing and lower NRI travel.

Key financials

  1. Revenue from Operations ₹66 Cr +7.1%YoY
  2. Gross Profit ₹45.9 Cr
  3. Gross Profit Margin 69.5%
  4. Employee Costs ₹25.9 Cr +19.2%YoY
  5. Other Expenses ₹13 Cr
  6. EBITDA ₹7 Cr
  7. EBITDA Margin 10.6%
  8. Finance Costs ₹0.3 Cr
  9. PAT ₹2 Cr

What they filed

Q1 FY27: revenue up 13.6%, net profit up 25.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue57 62 61 66 72 +26%66 +6%74 +21%75 +14%
EBITDA9 10 10 12 11 +22%7 −30%14 +40%14 +17%
Net profit6 5 4 8 9 +50%2 −60%10 +150%10 +25%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Dental Lab Business
    10.4% Growth
  • International Lab Business
    25% Growth
  • Aligner Solution Business
    ₹16.4 Cr Revenue
  • Vedia (Aligner Raw Material)
    19.6% Growth
  • Scanner Sales
    ₹6.4 Cr Revenue46% Growth
  • Kids-e-Dental
    ₹5.9 Cr Revenue7.2% Growth

Capital allocation

high confidence
  • Debt Net ₹0 Cr · 0.0× EBITDA
    We also achieved a significant reduction in finance costs, which declined sharply to INR 0.3 crore from INR 1.5 crore as the company is debt-free.

Guidance & targets

Revenue

  • International Business Growth Revenue · FY27 onwards · Medium confidence 20-25%
    So moving forward also, we feel that this range, 20%-25% range, provided something again exceptional doesn't happen in the US in terms of tariffs, it should be achievable.

    — Sameer Merchant

  • Domestic Business Growth Revenue · Next year (FY27) · Medium confidence 20-25%
    But otherwise I think we should still do in the range that we had said in the past which was 20%-25% if, you know, something like this year doesn't happen.

    — Sameer Merchant

  • Aligner Segment Revenue Revenue · Q4 FY26 · Medium confidence Close to INR 24 crores

    Previously INR 20-21 crores → Close to INR 24 crores

    So currently from a quarter which is INR 20-21, I would say we should be in good pace to have close to INR24 for the Q4 and then moving forward with that.

    — Sameer Merchant

Margin

  • International Business Margin Margin · Post tariff situation going down · Medium confidence Increase from ~22%
    And in terms of margin, when you said on the international side, we are already close to 22% margin. So this should also increase, post the tariff situation going down, we should see some improvement there as well.

    — Sameer Merchant

  • Overall EBITDA Margin Margin · Next year (FY27) · Medium confidence 18-20%

    Previously 17.5% → 18-20%

    See guiding forward we said, apart from if the situation is not like this year, next year we should have no issues in growing by 20%-25% and coming close to a margin of between 18% to 20%. We were already there at 17.5% was already there last year, in terms of EBITDA.

    — Sameer Merchant

Volume

  • Domestic Lab & Aligner Business Performance Volume · Q4 FY26 · High confidence Strong quarter
    Q4 we expect it to have a very strong quarter in terms of dental lab and in terms of the aligner business both. And we have already seen great results in January.

    — Sameer Merchant

Other

  • ESOP Costs Other · Next year onwards · High confidence Half the impact
    Additionally, the ESOP costs will also come down because the first year has a larger ESOP impact, so the next year onwards the ESOP impact will probably be half of that.

    — Dharmesh Dattani

  • Kids-e-Dental CE Certification Other · Q4 FY26 · Medium confidence Approval
    So we are hoping that we should get it in Q4. We'll keep you posted how situations move.

    — Sameer Merchant

What to watch in Q4 FY26

US Tariff Impact on EBITDA

Q4 FY26, Q1 FY27
Current 150 bps impact in Q3 FY26
Target Half the impact in Q4 FY26, further improvement from Q1 FY27

Why it matters

Direct impact on profitability and competitiveness in a key international market.

So I think for this quarter, we should see probably half the impact because today it's already 11th, so one and a half month we have paid 50%, but for the rest one and a half month we will pay 25%. But like you said from Q1FY27, we think this should improve our efforts on the US side.

Risks & concerns

  • US Tariffs (previously 50%, now 25%)

    high

    Impacted Q3 FY26 EBITDA margin by 150 bps; reduction to 25% is a positive development expected to improve profitability.

    Management acknowledged

  • Challenging global macroeconomic environment and geopolitical situations

    medium

    Impacted Q3 FY26 performance, but company expects to sail through with resilience.

    Management acknowledged

  • New labor code and accounting standards

    medium

    Resulted in a one-time exceptional item of INR 5.8 crores in Q3 FY26.

    Management acknowledged

  • Competitive pricing environment in clear aligner business (Bizdent)

    medium

    Caused softness in Q3 FY26, but new strategies are expected to lead to normalization and strong Q4 FY26.

    Management acknowledged

  • Slowdown in domestic lab business due to lower NRI travel

    medium

    Contributed to softness in Q3 FY26, but new strategies and January 2026 performance indicate recovery for Q4 FY26.

    Management acknowledged

  • Resistance to technology adoption among dentists for digital dentistry

    low

    95% of dentists still not using scanners, but company's penetration is high at 79% and growing.

    Management acknowledged

Q&A highlights

8 direct
Reason for Q3 sales decline despite peak season and tariff impact on margin, not sales. Direct
So we had to let go of few customers where the tariff situation could not allow us to give them the pricing that they needed. So that was also one of the reason especially in the US where tariff, even if it's at say 20-25% growth, we could have grown much stronger there if not for the tariff situation.

Clarifies that tariffs *did* impact sales volume by making pricing uncompetitive, not just margins, and also mentions lower NRI travel.

Asked by Sanjay Sood

Expected recovery timeline for US tariff impact (now 25% from 50%) and impact on FY27. Direct
So I think for this quarter, we should see probably half the impact because today it's already 11th, so one and a half month we have paid 50%, but for the rest one and a half month we will pay 25%. But like you said from Q1FY27, we think this should improve our efforts on the US side.

Provides a timeline for tariff impact reduction and expected business improvement in the US.

Asked by Kashish Thakur

Strategies to revive growth in the aligner business and expected volume vs pricing contribution in FY27. Direct
And moving forward as well, we are adding few more important aspects in the aligner category, so we see that it should have good growth in the next year.

Indicates strategic initiatives are underway and expected to yield growth in the aligner segment.

Asked by Kashish Thakur

Aspiration for Kids-e-Dental business in the next 2-3 years, given its current growth. Direct
In the next two-three years, it should have a solid growth. You know, we believe that we have products which are world-class. We are awaiting registration in many independent countries as well as, we are awaiting CE registration which will allow us to sell in whole of Europe and with the Europe FTA being planned for next financial year, I think we are in a good position to scale this very, very well.

Highlights the long-term growth potential and market expansion plans for the Kids-e-Dental segment, contingent on CE certification and EU FTA.

Asked by Kashish Thakur

How the 25% US tariff rate (vs 18% reported elsewhere) impacts margins and growth, and confidence in 20-25% growth. Direct
So on see, whenever something happens from 50%-57% to 25%, generally you know there is a positive sentiment among customers, amongst us, we can go back to them saying, 'Hey, you know, it's not 50% anymore, it's 25%.' So it's a bit of a breather for all.

Addresses the discrepancy in tariff rates and explains the positive sentiment and competitive advantage gained from the reduction.

Asked by Smith Gala

Impact of digital dentistry on dentist behavior and resilience of smaller clinics to scanner adoption. Direct
So if you see where we were probably three-four years back, we were in the 20s in terms of penetration, now we are 79% in terms of penetration. So once we reach a threshold of 90%, I think that's the pivoting point for us as for us to make a decision if to go 100% digital or not.

Details the company's high digital penetration among its network and the strategic importance of scanners for future growth and efficiency.

Asked by Kashish Thakur

If scanners can be used to send scans to other dental labs, and if digital transformation increases competition for Laxmi Dental. Direct
On your question of the scanner being sent to other dental lab, so how we sell the scanner is we sell it at a minimum value or a volume commitment from the dentist. If they are reaching that threshold, over and above that we keep the scanners open for them to decide what they want to do.

Clarifies the company's scanner sales model and explains why digital transformation is less likely to increase competition significantly for smaller labs due to the high investment and technical expertise required.

Asked by Manjeet Buaria

Why margins fell significantly (450 bps QoQ adjusted) despite US exposure being only 20%, and the path to 18-20% EBITDA margin. Direct
So there's a difference of 3% in terms of EBITDA, that too with everything that just you mentioned, about the volatility, about our ESOPs, about our tariff situation. So we feel that we have still been pretty strong in what we have done and we remain committed and we remain strong that we have been doing this since 36 years.

Addresses the margin compression, attributing it to a combination of factors (tariffs, ESOPs, labor codes, volatility) and reiterates confidence in achieving 18-20% EBITDA margin next year.

Asked by Kamlesh Bagmar

2 min read 6 chapters

Detailed narrative

Q3 FY26 Performance Overview

Laxmi Dental reported a revenue of INR 66 crores in Q3 FY26, marking a 7.1% year-on-year growth compared to INR 61.7 crores in the same period last year. Gross profit margin stood at 69.5%, with EBITDA at INR 7 crores, representing a 10.6% margin. Profit after tax for the quarter was INR 2 crores. The company also noted a significant reduction in finance costs to INR 0.3 crore, down from INR 1.5 crore, as it remains debt-free.

Impact of US Tariffs and Exceptional Items

The company's EBITDA margin was impacted by approximately 150 basis points in Q3 FY26 due to the full quarter effect of US tariffs. However, recent developments have seen these tariffs reduced from 50% to 25%, with management expecting about half the impact to reverse in Q4 FY26 and further improvement from Q1 FY27. Additionally, a one-time exceptional item of INR 5.8 crores was recorded due to new labor code requirements and accounting standards.

Segmental Performance and Strategic Initiatives

The international lab business demonstrated robust growth of 25% YoY, while scanner sales surged by 46% YoY to INR 6.4 crore. The domestic lab business and the Bizdent aligner solution experienced some softness in Q3, attributed to competitive pricing and lower NRI travel. However, strategic initiatives implemented in Q3 have shown positive impacts in January 2026, with management expecting a strong Q4 FY26 for these segments, targeting aligner segment revenue close to INR 24 crores.

Digital Dentistry and Market Penetration

Laxmi Dental's digital penetration at the company level has reached 79%, significantly higher than the overall Indian dental industry's single-digit penetration. Management emphasized the strategic importance of scanners, which saw a 46% YoY growth, in driving future growth and promoting digital dentistry. The company aims to reach a 90% digital penetration threshold, which it views as a pivotal point for fully digital operations.

Future Outlook and Margin Targets

Management expressed confidence in achieving 20-25% YoY growth for both international and domestic businesses in FY27, assuming a more stable operating environment. They also target an overall EBITDA margin of 18-20% for FY27, up from the current 10.6%, supported by reduced tariffs and lower ESOP costs (expected to halve from next year). The Kids-e-Dental segment, with 7.2% YoY growth, is awaiting CE certification, which is expected in Q4 FY26, to scale in Europe.

Competition and Operational Efficiency

The company acknowledges ongoing competition but believes its integrated approach, including 3D printing and CNC machines, provides a significant advantage over smaller, traditional dental labs that face higher investment and technical barriers to digital adoption. Management highlighted that digital impressions eliminate 30-35% of the process involved in physical impressions, enhancing speed, quality, and margin realization.

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