Motilal Oswal's research report on Galaxy Surfactants
Galaxy Surfactants (GALSURF) reported an EBITDA/kg of INR23.2 (our estimate at INR24.8; down 8% YoY). This was led by a contraction in the Specialty volumes due to slowdown in developed markets. Total volumes were flat YoY at 57.9tmt (v/s 57.5tmt in 4QFY22), mainly because of a decline in volumes in the AMET and RoW regions (at ~-3% and ~-16% YoY, respectively). Management highlighted that India volumes remained resilient (+14.6% YoY) with improved demand for premium categories that aided growth. Performance Surfactants also made a strong comeback during the quarter (+12% YoY volume growth). Rural demand recovery and an entry of a new player in the FMCG industry should drive the domestic market demand.
Outlook
The stock is currently trading at 23x FY25E EPS and 14.5x FY25E EV/EBITDA. We value the company at 30x FY25E EPS of INR111.5, to arrive at our TP of INR3,345. We reiterate our BUY rating with a potential upside of 33%.
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