Buy Galaxy Surfactants, target price Rs 3295: HDFC Securities

HDFC Securities has buy call on Galaxy Surfactants with a target price of Rs 3295. The current market price of Galaxy Surfactants is Rs 2935.85. Time period given by analyst is one year when Galaxy Surfactants Ltd. price can reach defined target.

Galaxy Surfactants Ltd., incorporated in the year 1986, is a Mid Cap company (having a market cap of Rs 10405.79 Crore) operating in Chemicals sector.

Galaxy Surfactants Ltd. key Products/Revenue Segments include Other Operating Revenue and Scrap for the year ending 31-Mar-2021.


Financials
For the quarter ended 31-03-2022, the company reported a Consolidated Total Income of Rs 1054.13 Crore, up 13.24 % from last quarter Total Income of Rs 930.85 Crore and up 34.10 % from last year same quarter Total Income of Rs 786.10 Crore. Company reported net profit after tax of Rs 98.40 Crore in latest quarter.

Investment Rationale
The brokerage BUY recommendation on GALSURF with a price target of INR 3,295 is premised on (1) stickiness of business, as over 50% of the revenue mix comes from MNCs and (2) stable EBITDA margin, since fluctuations in raw material costs are easily passed on to customers. Q4 EBITDA/APAT were 115/151% higher than estimates, owing to a 7% rise in the revenue and lower-than expected raw material cost (courtesy inventory gains), but were offset by lower than-expected other income and higher-than-expected tax outgo.

Promoter/FII Holdings
Promoters held 70.93 per cent stake in the company as of 31-Mar-2022, while FIIs owned 1.89 per cent, DIIs 13.78 per cent.