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Buy Galaxy Surfactants; target of Rs 3632: Motilal Oswal

Motilal Oswal is bullish on Galaxy Surfactants recommended buy rating on the stock with a target price of Rs 3632 in its research report dated April 20, 2022.

April 21, 2022 / 04:28 PM IST

"India’s specialty chemicals industry is a decadal growth opportunity and it is still not too late to participate in the value creation process. We prefer CRAMS/CSM players Navin Fluorine (Navin) and PI Industries (PI) as they provide long-term earnings visibility. We also like UPL due to robust growth outlook and reducing debt concerns and SRF due to rising contribution from the chemicals business," JM Financial research report.

 
 
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Motilal Oswal's research report on Galaxy Surfactants


The price of Fatty Alcohol, a key raw material for GALSURF, surged 52% YoY in 4QFY22 (up 16% QoQ) due to supply-related issues. Freight rates have also increased 300-1,000% from the pre-pandemic levels, while lead time still remains high for supply of raw materials (at 2-3 weeks). The management has already guided for a normalization of margin to INR16-18/kg from a high of INR20.5/kg in 3QFY21. However, the current high raw material prices may cause a dent in GALSURF’s margins in the short-term. Nonetheless, despite the likely short-term pressure on margins, we maintain our BUY rating on the stock, given its: a) robust volume growth trajectory, and b) continued focus on expansion, especially in the specialty care products segment, which should underpin margin expansion.



Outlook


We value GALSURF at 40x FY24E EPS of INR91 to arrive at our TP of INR3, 632, implying 22% potential upside.


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At 16:01 hrs Galaxy Surfactants Ltd. was quoting at Rs 2,951.00, down Rs 24.65, or 0.83 percent.


It has touched an intraday high of Rs 2,998.65 and an intraday low of Rs 2,951.00.


It was trading with volumes of 631 shares, compared to its thirty day average of 2,192 shares, a decrease of -71.21 percent.


In the previous trading session, the share closed up 1.24 percent or Rs 36.40 at Rs 2,975.65.


The share touched its 52-week high Rs 3,600.00 and 52-week low Rs 2,561.50 on 14 September, 2021 and 23 April, 2021, respectively.


Currently, it is trading 18.03 percent below its 52-week high and 15.21 percent above its 52-week low.


Market capitalisation stands at Rs 10,462.70 crore.


For all recommendations report, click here


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first published: Apr 21, 2022 04:28 pm
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