Sunday, December 10, 2023

Alpha | Galaxy Surfactants Ltd.

Galaxy Surfactants Ltd. – A A part of FMCG

GSL (Galaxy Surfactants Ltd.) group, arrange in 1980, manufactures, sells, and distributes surfactants and specialty chemical substances, that are used as intermediate uncooked supplies within the House and Private Care (HPC) merchandise. It is without doubt one of the main gamers on the earth of Surfactants and Specialty Care Substances completely targeted on catering to the House and Private Care Trade. The corporate has 7 State of the Artwork Crops with 5 Manufacturing Amenities in India, 1 in Egypt and 1 in USA. 9/10 Indian Customers use Merchandise which have Galaxy’s surfactants or specialty care merchandise atleast as soon as of their Every day Routine. The corporate manufactures greater than 200 merchandise and caters to 1750+ prospects throughout 80+ nations.

Merchandise & Companies:

The corporate enterprise consists of two most important segments particularly Efficiency Surfactants and Specialty care merchandise.

Efficiency Surfactants – This section additional divides into Anionic and Non-ionic surfactants with merchandise particularly FAES, FAS, ethoxylates, and so forth. which used as Foam and Filth removals, emulsifiers and solubilisers ultimately consumer industries like Hair Care (shampoos, conditioners, colorants, styling gels), and so forth.

Speciality care merchandise – It has a number of divisions particularly UV filters, Amphoteric Surfactants, Cationic Surfactants, Preservatives, Preservative Blends, Speciality Substances, and so forth. with merchandise resembling Betaines, Sunscreen Brokers (OMC, OCN &Others), Clear Bathing Bar Flakes, Surfactant Blends, Conditioning Brokers and others. These merchandise are used ultimately industries like Oral care, House care, Hair care, Cosmetics, and so forth.

Subsidiaries: As on FY22, the corporate has 5 wholly owned subsidiaries.

Key Rationale:

  • Sturdy Place – The GSL group has been engaged within the manufacturing and sale of surfactants and specialty chemical substances used as intermediates by the HPC trade for greater than 4 many years. The corporate is without doubt one of the main gamers within the world HPC intermediaries’ trade propelled by a long-standing relationship with its purchasers. The corporate has a big consumer base of 1700+ prospects throughout 80+ nations which incorporates high worldwide and domestics FMCGs. The corporate’s high 10 purchasers are Unilever, Dabur, P&G, Himalaya, Henkel, Emami, Loreal, Cavinkare, Colgate Palmolive and Reckitt Benckiser. Purchasers smart, MNC prospects contributes 51% of the income adopted by Regional gamers with 11% and Native & Area of interest gamers with 38% in FY22.
  • Sturdy Aggressive Benefit – The group is built-in throughout the complete worth chain of the HPC trade. The corporate has a robust R&D targeted workforce contains of 74 professionals who works at a devoted R&D centre. As of Q3FY23, the group has 88 authorised patents and has additionally utilized for an additional 15, which is able to proceed to help its rising product base (205+) over time. Because the private care merchandise should adhere to regulatory requirements for well being and security functions, the HPC product producers don’t typically change their distributors until the seller is unable to stick to high quality requirements or provide timelines. The switching prices for HPC firms can also be increased for tailor-made merchandise throughout end-user classes. This acts as a excessive entry barrier for the Trade and Galaxy, serving to many of the FMCG giants, is having fun with a robust aggressive benefit.
  • Q3FY23 – The corporate reported a income development of 16% YoY in Q3FY23 to Rs.1080 crs. The EBITDA had a development of 102% YoY to Rs.154 crs in Q3FY23 with an EBITDA margin of 14.2%, a rise of 610 bps from Q3FY22. The Revenue after tax reported a large development of 133% YoY to Rs.106 crs in Q3FY23 from Rs.46 crs in Q3FY22. Section smart, Efficiency surfactants reported a income development of 20% YoY and specialty care merchandise with 11% YoY in Q3FY23.
  • Monetary Efficiency – The entire volumes of the corporate have grown at a CAGR of 6% between FY17-22. The corporate’s income and PAT CAGR stands at 10% and 21% between FY15-22. The corporate has generated a cumulative Free cashflow (FCF) round Rs.825 crs up to now 6 years (FY15-21) barring FY22 since Excessive receivables and stock hit a toll on the working cashflow for FY22. The FCF of the corporate has grew at a CAGR of 60% from Rs.15 crs in FY15 to Rs.257 crs in FY21.


Protecting greater than 80,000 business merchandise, India’s chemical trade is extraordinarily diversified and may be broadly categorized into bulk chemical substances, specialty chemical substances, agrochemicals, petrochemicals, polymers, and fertilisers. The Indian chemical substances trade stood at US$ 178 billion in 2019 and is predicted to achieve US$ 304 billion by 2025 registering a CAGR of 9.3%. Oleochemicals are chemical compounds derived from pure fat and oils that can be utilized as uncooked supplies or as supplemental supplies in a wide range of industries. Oleochemicals can be utilized as an alternative choice to petroleum-based merchandise generally known as petrochemicals. Oleochemicals principally cater to Private care and residential care section of FMCG Trade. Indian magnificence and private care (BPC) market is the eighth largest on the earth. Fragrances, Make-up and Cosmetics, Males’s Grooming are all anticipated to develop at CAGR 12-16%. The non-public hygiene market is predicted to achieve $15 Bn by 2023 in India. In India, the Oral Care section generated revenues of over $1.57 Bn in 2021, and the market is predicted to develop at an annual fee of 4% between 2021 and 2026 to achieve $2.08 Bn by FY26. Indian Hair Care market is predicted to achieve $4.89 Bn by 2025 with a CAGR of 6.6%. In 2021, the Hair Care section accrued income of $2.55 Bn. The share of hair care market is largest within the beauty trade in India, dominated by the hair oil section.

Development Drivers:

  • Indian magnificence and private care (BPC) market stands at $15 Bn and is rising at 10%, anticipated to double by 2030 with skincare and cosmetics driving this development.
  • Rural per capita consumption will develop 4.3 instances by 2030, in comparison with 3.5 instances in city areas.
  • A rise in demand for private care and residential care merchandise together with speedy urbanisation, increased earnings ranges, and evolving preferences is predicted to drive development in surfactants consumption.

Rivals: Aarti Surfactants, Commonplace Surfactants, and so forth.

Peer Evaluation:

Galaxy Surfactants is the India’s largest Producer of Oleochemical based mostly Surfactants for HPC Trade and no different firm is specifically catering to that trade on the entire. From the above, it’s evident that the corporate has no direct friends when it comes to the tip utilization and it has robust financials which is missing for its friends.


The administration highlighted that the general volumes ought to make a comeback in FY24 as native Egypt volumes are getting higher and prospects are assured of volumes restoration in Turkey as nicely. Indian demand continues to be robust and nicely in line to cross 100 MTPA gross sales volumes within the home market. The capex for FY24 anticipated to be round Rs.150 Crores, with Rs.120 Crores already spent within the first 9 months of FY23. The administration goals for a quantity development of 6-8% and it expects EBITDA and PAT to develop increased than the amount development with a ROCE of round 22%. Present capability utilization stage stands at 65-67% with an optimum utilization at 85%. Europe and China are anticipated to bounce again with normalisation of inflation/covid scenario which is able to assist to enhance the speciality care merchandise quantity.


The corporate’s distinctive merchandise with a robust consumer base in a much less aggressive market paves manner for a sturdy development. Secure home development and restoration within the export development will shoot up the revenues going ahead. We advocate a BUY score within the inventory with the goal worth (TP) of Rs.3065, 25x FY25E EPS.


  • Uncooked Materials Threat – Fatty-alcohol costs have been very risky traditionally. Though administration was capable of management and hedge its prices to a big extent, continued volatility would pose threat to the margins of the corporate.
  • Shopper Focus Threat – The corporate drives its income majorly from FMCG trade thus any slowdown in FMCG trade will instantly affect the income development of the corporate.
  • Export Threat – Continued weak point in demand within the export market resembling China, Europe, and so forth. will have an effect on the export volumes and thereby affecting the income development of the corporate.

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