Feb'25 View on Galaxy Surfactants Ltd

Galaxy Surfactants Ltd was Incorporated in 1986. It’s a leading manufacturer of Performance Surfactants and Specialty Care products with over 205 product grades. These products are used in consumer-centric Home and Personal care products like hair care, oral care, skin care, cosmetics, soap, shampoo, lotion, detergent, cleaning products, etc. Preferred suppliers to leading MNC’s, Regional and Local FMCG brands. The company is India’s Largest Manufacturer of Oleo chemical-based Surfactants and Specialty Care Products for Home Care and Personal Care Industries Galaxy Surfactants’ Q3FY25 revenue of Rs 1,042 crore, up 10.8% YoY but down 2% QoQ, missed our estimates, primarily due to a significant slowdown in India, where volumes declined 7% YoY, while AMET and Rest of World (ROW) markets saw declines of 1.5% and growth of 9.5%, respectively. Overall volumes for the quarter stood at approximately 62,634 MT, reflecting a 1% YoY decline. EBITDA stood at Rs 106 crore with a 10.1% margin, while EBITDA per kg fell to Rs 16.9 from Rs 18.7 in Q2FY25 and Rs 17.8 in Q3FY24, impacted by higher fatty alcohol prices and supply-side challenges. While the festive season failed to boost Indian demand, AMET volumes improved QoQ due to a stabilizing supply chain, and ROW markets showed strong momentum despite seasonal holidays. Management expects Q4FY25 to remain muted due to India’s cyclical slowdown but sees a demand recovery from Q1FY26. We revise FY27E EPS to Rs 13.4 (from Rs 15.5) to account for near-term headwinds but remain confident in the long-term growth story, driven by subsiding inflation, rising personal expenditure post budget boost, and improved AMET performance. With the stock is trading at 23x FY26E and 20x FY27E earnings after a recent correction, we upgrade to ADD with a revised target price of Rs 2,586 valuing the stock at ~22x FY27E earnings. Key risks include sustained raw material price pressures, weak Indian demand, and AMET underperformance.