The administration of Galaxy Surfactants has already guided for a normalization of margin to ₹16-18/kg from a excessive of ₹20.5/kg in 3QFY21. Nonetheless, the present excessive uncooked materials costs could trigger a dent within the specialty chemical producer’s margins within the short-term, highlighted brokerage agency Motilal Oswal.
Nonetheless, regardless of the possible short-term stress on margins, the brokerage has maintained its Purchase score on the specialty chemical inventory, given its strong quantity development trajectory, and continued give attention to growth, particularly within the specialty care merchandise section, which ought to underpin margin growth.
It has a goal worth of ₹3,632 per share on Galaxy Surfactants shares, that suggests a possible upside of greater than 21% from present inventory degree.
“The administration has guided for a capex of ₹4 billion over FY22-24E with an outlay of ₹1.5 billion already carried out for 9MFY22. Growth of merchandise is prone to be throughout the board however focus would stay primarily on the specialty care merchandise section. Additional, continued give attention to R&D and elevated pockets share from current prospects are prone to drive quantity development,” the observe said.
Draw back dangers to its name, as per Motilal Oswal, are demand could not choose up in congruence to the capability growth happening within the Specialty Care section, and rising feedstock costs and freight charges could result in underperformance of the inventory.
“Although recovering industrial actions have pushed up the demand for Fatty Alcohol considerably, the worth has remained elevated as a result of provide tightness. Additional, Indonesia’s announcement to limit its outbound shipments of Palm Oil ought to lengthen this provide crunch, in our opinion,” the brokerage added.
The views and proposals made above are these of particular person analysts or broking corporations, and never of Mint.
Supply: Live Mint