Galaxy Surfactants share price jumped over 6% on Thursday, 1 October, following a positive outlook from Nuvama Institutional Equities. The brokerage retained its 'Buy' rating on the stock and raised its target price to ₹3,265 from ₹2,927, citing improving profitability, a favourable shift towards oleochemical-based surfactants and a gradual recovery in AMET volumes. According to reports from LiveMint, Nuvama also raised its FY27 and FY28 earnings-per-share (EPS) estimates by 13.4% and 11.5% respectively. The stock currently trades at around 19.3x FY28E EPS, according to the brokerage.
Nuvama expects Galaxy Surfactants to benefit from crude oil prices remaining above $100 per barrel, as the industry undergoes a reformulation shift from crude-based to oleochemical-based surfactants. As reported by LiveMint, Galaxy's surfactants are palm-based, while competing alternatives such as LABSA and certain SLES/SLS routes are linked to crude-derived raw materials. Galaxy's EBITDA per tonne is expected to remain at around ₹24,000–25,000 in FY27 and FY28, compared with earlier assumptions. The cost advantage of oleochemical-based formulations improves as crude prices rise, supporting Galaxy's profitability per tonne.
The brokerage expects volumes in Africa, Middle East and Turkey (AMET) to gradually recover, with AMET volumes currently at about 60,000 tonnes compared to a peak of around 90,000 tonnes in FY21. According to LiveMint, Galaxy's AMET volumes declined 4% in Q1 FY27 after raw materials were held at Egyptian ports for seven weeks, but volumes in the region grew sequentially in the high teens after supplies were cleared. Nuvama believes the recovery could provide an efficient earnings boost, as the company's Suez plant operates in a free zone with duty-free imports and nil tax. The brokerage highlighted Galaxy's expansion into leave-on categories including skincare, sun care, cosmetics and dermatology, with newer products expected to generate EBITDA of around ₹35,000–45,000 per tonne.
Galaxy's Vision 2030 remains another key driver of growth, with management targeting a doubling of volumes and a 2.5x increase in EBITDA by 2030. As reported by LiveMint, around 50% of growth is expected to come from organic expansion, 30% from new products and categories, and 20% from acquisitions. The brokerage highlighted the company's partnerships with DKSH across 16 European markets and the Unilever charter covering Beauty and Wellbeing as potential avenues to accelerate the adoption of newer products in developed markets. Despite the positive outlook, Nuvama highlighted several risks including the absence of long-term raw-material supply contracts, dependence on key customers, reliance on a single supplier and foreign-currency fluctuations.
