Galaxy Surfactants- A stable performance in the storm.

Dated – 19th August 2019

About company

• Galaxy Surfactants Limited is a leading manufacturer of performance surfactants and specialty care products with over 200 product grades used in Home and Personal Care industry. Galaxy surfactants has its presence in 70 countries with more than 1700 Customers.

Q1FY20

• Galaxy Surfactants reported 7% YoY decrease in their revenue at Rs 6,650 Mn
• Total Volume grew by 4% on YoY basis to 54,767 MT.
• Galaxy reported EBITDA growth of 12% YoY basis to Rs 970 Mn.
• Profit after tax stood at Rs 530 Mn, a jump of 15% YoY basis.

Management Commentary

• -7% decrease in the revenue was mainly caused by decrease in their raw material cost (Fatty alcohol), which declined by 19%.
• Galaxy surfactants completed its capex at Jhagadia plant, which increased the capacity by 50,000 MT.
• Capex guidance for the year FY20 is Rs 1250 Mn.
• Management guided that EBITA per tonne will be in the range of 15,000 MT to 17,000 MT.
• There was marginal impact of Ind AS 116 on the company.
• As per the current scenario in domestic market, management expects Q2FY20 to be weaker, whereas in Q3FY20 & Q4FY20 management expects revival of demand in domestic market.
• Galaxy surfactants continuous to perform well in Rest of the world market. In Q1FY20 company reported 26.5% YoY increase in their sales volume (in MT).

 Consensus Estimate (Source: market screener website)

• The closing price of Galaxy Surfactants was Rs 1,302/- as of 19-August-2019. It traded at 21.4x/18.4x consensus EPS for FY20E and FY21E is Rs 60.8/- & Rs 70.6/- respectively.
• Consensus target price of Rs 1,340/- implies a PE of 19.0x on FY21E EPS of Rs 70.6

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