MOSL: GALAXY SURFACTANTS (Buy)-Demand outlook remains robust; supply chain frail
GALAXY SURFACTANTS: Demand outlook remains robust; supply chain frail
(GALSURF IN, Mkt Cap USD1.5b, CMP INR3078, TP INR3620, 18% Upside, Buy)
- Galaxy Surfactants (GALSURF) reported a mixed set of numbers - with higher-than-estimated revenue (+36% YoY / +5% QoQ), amid improved realization, in line with higher raw material costs. However, higher RM and international freight costs impacted EBITDA - which came in below estimates (+20% YoY / -8% QoQ), translating to gross margins of INR43.8/kg - with the EBITDA margin at INR18.1/kg.
- In 1QFY22, volumes (Performance Surfactants +7% YoY / -7% QoQ; Specialty Products +36% YoY / -1% QoQ) were lower on the back of a key raw material supply crunch due to supply chain disruption internationally. The management believes the international logistics scenario is likely to remain challenging for the remaining months of FY22 as well.
- That said, demand for performance surfactants remains strong, and the opening up of developing economies would aid higher growth in the Specialty segment as well.
- COVID has resulted in a huge delay (of more than 18 months) in setting up new capacities for specialty products (at Tarapur and Jhagadia), which are now expected to get commissioned by Dec'21. Higher capacity for specialty products, coupled with moderation in the logistics scenario by end-FY22, would result in better margins and volumes growth.
Galaxy Surfactants Ltd. Galaxy Surfactants Limited is an India-based company, which is engaged in manufacturing and marketing surfactants and specialty chemicals for personal and home care industry. The Company produces a range of vital cosmetic ingredients, including active ingredients, ultra violet (UV) protection and functional products. Its products cater to various brands in the fast moving consumer goods (FMCG) sector and offers in various applications, including skin care, hair care, oral care, body wash, sun care, household cleaners and fabric care segments. It offers its products under various categories, such as mild surfactants, including sodium Cocoyl Isethionate, Alkyl Polyglucoside and Sodium Lauryl Sarcosinate; surfactants, including Betaines and Lauryl Alcohol Eithoxylates; rheology modifier, including Cocomonoethanolamide and Cocodiethanolamide; conditioning agents, including PEG-7 Glyceryl Cocoate and Polyquaternium-7; UV absorbers, including Octyl Methoxy Cinnamate and Octocrylene.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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