Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  

| More

Galaxy Surfactants - Risk of gross profit/kg normalisation - ICICI Securities

Posted On: 2021-06-10 14:39:31 (Time Zone: UTC)

Galaxy Surfactants' (GSL) Q4FY21 gross profit/kg was strong at Rs45 (up 10.6%), but we see this tapering in coming quarters. EBITDA/kg of Rs18.6/kg was impacted from higher cost inflation (which are unsustainable). Net profit continues to grow strong at 25% YoY. We see risk of normalisation in gross profit/kg capping the net profit growth in FY22. We remain excited about new green product launches which will help GSL strengthen its market position in specialty care products. We are incrementally seeing tier-1 customers emphasising reduction in carbon footprint; GSL seems prepared for this transition, in our view. Despite strong performance in Q4FY21, we are broadly retaining our EPS estimates as we factor gross profit normalisation in FY22. However, we upgrade our target price to Rs3,102 (from Rs2,583) as we raise our P/E multiple to 30x (from 25x); we downgrade our rating to HOLD (from Buy) on the recent rally in stock price and like muted FY22 earnings.

- Specialty chemical volumes rose 10.5% YoY. GSL revenue rose 19.3% YoY to Rs7.8bn driven by 10% growth in realisation to Rs124/kg and 8.4% volume growth to 63kte. India volume grew slower at 5.8% YoY, AMET was strong at 13.4% and RoW stable at 3.8%, which was impacted from logistic issues. Performance product volumes rose 7.4% YoY and specialty care volumes up 10.5% YoY despite low growth in RoW.

- Gross profit/kg was Rs45.4, up 10.6%. Gross profit rose 20% YoY to Rs2.9bn and benefited from rise in LA prices (inventory gains, in our view). Gross profit/kg has been very strong at Rs45.4, and the company hinted it may taper down in the next few quarters. We see this benefit mostly accruing from subsidiaries (Egypt and Tri-K), and GSL hinted partially gross profit benefited from rise in specialty care mix in Egypt. EBITDA grew slower at 14.4% YoY to Rs1.2bn; EBITDA/kg was at Rs18.6, up 5.5% YoY. Rise in operating cost by 24% was due to one-time bonus to employees and higher freight cost, which are unsustainable. Net profit grew 25.3% YoY to Rs787mn. The company has maintained its EBITDA/kg guidance of Rs16-18/kg.

- Conference call highlights. 1) RoW volumes were hurt from logistics issues. Company expects volume growth to pick-up. 2) Indian volumes slowing down to 5.8% YoY is not an indication of any slowdown, but just quarterly volatility. 3) company does not see much risk in passing on RM inflation as demand remains stable, and it would be tough only if demand starts getting impacted; 4) it also does not see much risk of shift to petrochemical-based surfactants on relatively sharper rise in LA prices; 5) India business had 15% revenue from specialty care products; specialty care majority revenues come from RoW. Egypt is seeing a rise in specialty contribution; 6) Galaxy margins were impacted from withdrawal of export incentives (MEIS scheme) and no alternative benefit is announced yet; and 7) Galaxy sees its capex plans delayed by six months. It plans to incur annual capex of Rs1.5bn.

Shares of Galaxy Surfactants Ltd was last trading in BSE at Rs.3072.1 as compared to the previous close of Rs. 3023.55. The total number of shares traded during the day was 3808 in over 898 trades.

The stock hit an intraday high of Rs. 3080 and intraday low of 3022.1. The net turnover during the day was Rs. 11641801.

Source: Equity Bulls

Click here to send ur comments or to

Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only., its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.

Other Headlines:

CESC Q4FY21 Results Review Report - Loss decline, strong CF make valuation attractive - HDFC Securities

White Goods & Durables - Analysis of pressure cooker market: TTK Prestige is key beneficiary - ICICI Securities

CESC - Good earnings in a challenging environment - ICICI Securities

Somany Ceramics - Walking the talk - ICICI Securities

DB Corp - Rise in newsprint price adds to risk - ICICI Securities

CEAT - Market share ambitions remain strong - ICICI Securities

Consumer Staples & Discretionary - Worm's world view #32: Conversations with paint dealers regarding price hikes - ICICI Securities

Oil & Gas - Oil, gas & spot LNG surge to bring gains for GAIL & OIL - ICICI Securities

Asset Management Companies - Positive trends to support earnings - ICICI Securities

Q4FY21 Result Update - Lemon Tree Hotels - ICICI Direct

Q4FY21 Company Update - Globus Spirits - ICICI Direct

Q4FY21 Result Update - DB Corp - ICICI Direct

Q4FY21 Result Update - Somany Ceramics - ICICI Direct

KEC International: Company Update - Building on diversification - HDFC Securities

LIC Housing Finance - Q4 FY21 Result Update - YES Securities

Entertainment Network Ltd - Beating on solutions business - ICICI Securities

Asahi India Glass - Operating leverage, product mix aid margins - ICICI Securities

Whirlpool of India - Market leading revenue growth - ICICI Securities

Lemon Tree Hotels - Wait for recovery gets longer - ICICI Securities

LIC Housing Finance - Stupendous growth momentum; needs to shore up provisioning and capital buffer - ICICI Securities

Quant Pick - Bank of Baroda - ICICI Direct

Company Update - Amara Raja Batteries - Investor Event Outcome - ICICI Direct

Q4FY21 Result Update - Bhel - ICICI Direct

Q4FY21 Company Update - NRB Bearings - ICICI Direct

CESC - Q4FY21 First Cut - ICICI Direct

Q4FY21 Result Update - Entertainment Network India - ICICI Direct

LIC Housing Finance Results Review Report - Balance sheet beefs up; P&L to stay soft - HDFC Securities

Jubilant FoodWorks 4QFY21 Results Review Report - Missing excitement; recovery priced in - HDFC Securities

BFSI Sector Update - MFI Consultation Paper Takeaways - Incrementally positive for NBFC-MFIs - HDFC Securities

Q4FY21 Result Update - JK Cement - ICICI Direct

Q4FY21 Result Update - Minda Industries - ICICI Direct

Stock Tales - Indo Count Industries - ICICI Direct

IPO Review - Krishna Institute of Medical Sciences Ltd - ICICI Direct

Q4FY21 Company Update - Greenply Industries - ICICI Direct

IPO Review - Dodla Dairy Ltd - ICICI Direct

Lemon Tree Hotels - Q4FY21 First Cut - ICICI Direct

Jubilant Foodworks - Q4FY21 investor call takeaways - YES Securities

Greenply Industries Ltd - Q4 FY21 Result Update - YES Securities

Whirlpool of India Ltd - Q4 FY21 Result Update - YES Securities

New India Assurance Report - CoRs disappoint yet again - HDFC Securities

Maintain BUY on Kajaria Ceramics - Performance shines through; outlook bright - HDFC Securities

Retain ADD on Deccan Cement - Volume strong; high other expense dents margin - HDFC Securities

Reiterate ADD on NHPC - Lower generation impacts earnings - HDFC Securities

Maintain BUY on JK Cement - Robust volume and utilisation - HDFC Securities

Maintain BUY on DLF - Gaining traction - HDFC Securities

Maintain BUY on Capacite Infraprojects - Marginal miss - HDFC Securities

DLF Ltd - Q4 FY21 Result Update - YES Securities

Greenply Industries Ltd - Q4FY21 first cut - YES Securities

Coal India - Coal makes a comeback - ICICI Securities

Kajaria Ceramics - Q4FY21 beat largely priced in - ICICI Securities

Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2020