Galaxy Surfactants Gets 'Add' As Yes Securities Initiates Coverage, Sees 16% Upside

Yes Securities Report

We initiate coverage on Galaxy Surfactants Ltd. with an Add rating and a target price of Rs 3,250.

A proxy to the FMCG industry Galaxy surfactants is well-positioned to capitalize on growing demand for personal care and home care products globally. Its relentless focus on expanding the high-margin specialty care product segment, currently fetching ~40% of revenues, is expected to drive an Ebitda CAGR of ~14.3% over the span FY24-27.

Fading geopolitical challenges and improving rural dynamics should bring stability and restocking in H2 FY25. As regards the raw material volatility, Galaxy has the ability to pass on the hike to consumers with a lag, thereby normalizing its margins annually.

Galaxy’s capacity expansion of Rs 1.5 billion capex, with utilization projected to rise from 70% to ~85% over the next three years, ably supports 6-8% volume CAGR.

Galaxy has a well spread-out geographical presence across India, Africa, Middle East and Turkey, Rest of the world. Further, it is debt-free with free cash flow likely to touch Rs 3.5 billion by FY27.

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