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Galaxy Surfactants — Management Says Supply Issues To Normalise From FY23: Nirmal Bang

Galaxy Surfactants Says Supply Issues To Normalise From FY23: Nirmal Bang

An employee prepares a chemical solution in a flask during a test (Photographer Brent Lewin/Bloomberg)
An employee prepares a chemical solution in a flask during a test (Photographer Brent Lewin/Bloomberg)

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Nirmal Bang Report

Management highlighted that unavailability of key raw materials, further increase in freight costs and elongated supply chain cycle affected the latest quarterly performance.

While availability issue in India has now been resolved, GALSURF imports ~60% of the RMs from overseas markets and 2/3rd of the revenue is also derived from the overseas markets.

Therefore, while we expect sequential improvement in EBITDA/kg, efficient pass-through w.r.t. RM and freight costs might take 1-2 more quarters. Management reiterated that underlying demand across geographies continues to remain robust.

We continue to remain positive on the business opportunity considering the structural shift from synthetic to natural chemicals globally and GALSURF has presence across the HPC segment in all geographies and has developed very strong customer relationships.

We are building in Revenue/EBITDA/APAT CAGR of 5%/15%/15% over FY22E-24E. We maintain Buy rating on GALSURF with an unchanged target price

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Galaxy Surfactants- Management Meet Update- 19 November 2021.pdf

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