Buy Galaxy Surfactants; target of Rs 3556: Motilal Oswal

Trade

• Watchlist
• Portfolio
• Message
• Set Alert

 

 

live

• bselive
• nselive

Volume

Todays L/H

More

×

Motilal Oswal's research report on Galaxy Surfactants

Irrespective of volatility in raw material prices and stressed margins, demand from the end-user industries remained undeterred over the past year. However, today, we are noticing demand cutbacks in various regions the company operates in. Although prices of key raw materials—Fatty Alcohol and Ethylene Oxide—for the company have been on a decline, which comes as a boon for the company, the demand cut back that is being seen could pose a threat to growth opportunities in FY23 itself. The management has guided for an EBITDAM of INR16-18/kg with a bias on the higher side of the band. We forecast the margin to normalize over the next two quarters, although we expect it to be INR20/kg for FY23, owing to the outperformance in 1QFY23.

Outlook

Despite the above, we reiterate our Buy rating on the stock, given: a) robust volume growth trajectory, and b) its continued focus on expansion, especially in the specialty care products segment that should aid in margin expansion. We value the company at 40x FY24E EPS of INR89 to arrive at our TP of IN3, 556.

For all recommendations report, click here

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Galaxy Surfactants - 221022 - moti