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Nirmal Bang Report
We downgrade Galaxy Surfactants Ltd. to a Hold with a revised target price of Rs 3,000 (25 times PE on Dec’26 earnings) on account of the ongoing demand challenges in India and supply chain related challenges in the Africa, the Middle East & Turkey region, mainly for raw material procurement. The timing of recovery in both these regions is uncertain in the near term. Rest of world markets is expected to continue its strong double digit growth momentum.
Consolidated volume growth in H1 FY25 stood at 6.3% YoY wherein India and AMET volume growth came flat. The commentary from Indian consumer companies also does not indicate clear signs of recovery in the near-term. The Red Sea route is still not being considered by major shipping lines which continues to cause supply chain challenges, mainly in the AMET region.
Our original thesis was that FY25 could be the first year after IPO where all regions would contribute to growth, leading to blended early double digit growth. Considering the current environment, this looks unlikely in the nearterm. Volume growth miss could be the negative stock trigger.
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