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Jan 29, 2018 08:01 AM IST | Source: Moneycontrol.com

Galaxy Surfactants IPO opens today. Should you subscribe to the issue?

Multiple brokerages are recommending subscribing to the issue, citing fair valuations and factors such as having a first movers’ advantage.

Galaxy Surfactants is set to open its initial public offer (IPO) on January 29. This is its second attempt to raise funds via an IPO, and this time the company intends to raise around Rs 937 crore from this issue.

Multiple brokerages are recommending subscribing to the issue, citing fair valuations and factors such as having a first movers’ advantage.

The price band for the issue has been set at Rs 1,470-1,480 per share.

The company plans an IPO of up to 6,331,674 equity shares of face value of Rs 10 each for cash.

ICICI Securities, Edelweiss Financial Services and JM Financial Institutional Securities will manage the company’s public issue. The company's equity shares are proposed to be listed on BSE and NSE.

Earlier in 2011, Galaxy Surfactants had entered the capital markets to raise over Rs 200 crore through an initial public offer (IPO). However, it withdrew from the IPO market due to tepid response from investors.

SSJ Finance | Rating: Subscribe

The brokerage house highlighted that the firm reported a CAGR of 8.4% and 24.4% on revenue and net profit fronts respectively over FY2014-2017. On its upper band of price of Rs 1480, the issue is priced at PE ratio of 34.9x of its H1FY2018 annualised EPS of Rs 42.4. It believes that the IPO is fairly priced leaving a room for upside and hence recommends subscribing to the same.

Hem Securities | Rating: Subscribe

Speaking on valuations, Hem Securities said that the company is bringing the issue at P/E multiple of 35 on annualized H1FY18 EPS at higher price band of Rs 1470-1480/share.

“The company being established global supplier to major FMCG brands with demonstrated track record has robust product portfolio & proven R&D capabilities with strong presence in high growth markets of India and AMET region. Looking after strong fundamentals & financial performance, we recommend “Subscribe” on issue,” the brokerage said in its report.

SMC Research | Rating: 2.5/5

SMC Research too said that the company is an established global supplier to major FMCG brands. Over the years, it has significantly expanded and diversified its product profiles, client base and geographical footprints. It has no listed peers to compare with, thus it is a first mover in this segment, the report stated.

Centrum Broking | Rating: Listing Gains possible

The brokerage said that the company has decent set of financials (FY14-17 revenue and PAT CAGR of 8% and 24%, respectively, EBITDA margins of 12%, RoE of 25% and positive free cash flows). “Given the decent financials and future growth prospects, the IPO could garner interest in the current market environment. Hence, we believe that despite fair valuations, the listing may still be at a premium to the offer price,” the brokerage said in a report.
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