Buy Galaxy Surfactants, target price Rs 3725: HDFC Securities

HDFC Securities has buy call on Galaxy Surfactants with a target price of Rs 3725. The current market price of Galaxy Surfactants is Rs 3214.2. 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 11175.34 Crore) operating in Chemicals sector.

Galaxy Surfactants Ltd. key Products/Revenue Segments include Other Operating Revenue and Scrap for the year ending 31-Mar-2022.



Financials
For the quarter ended 30-06-2022, the company reported a Consolidated Total Income of Rs 1156.88 Crore, up 9.75 % from last quarter Total Income of Rs 1054.13 Crore and up 39.23 % from last year same quarter Total Income of Rs 830.90 Crore. Company reported net profit after tax of Rs 100.37 Crore in latest quarter.

Investment Rationale
BUY recommendation on GALSURF with a price target of INR 3,725 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. Q1 EBITDA/APAT were 33/37% higher than estimates, owing to a 13% rise in the revenue, lower-than-expected other expense, and lower-than-expected tax outgo.

Promoter/FII Holdings
Promoters held 70.93 per cent stake in the company as of 30-Jun-2022, while FIIs owned 2.01 per cent, DIIs 13.62 per cent.