Buy This Mid-Cap Specialty Chemical Stock That Can Grow Up To 35.64%, Suggests HDFC Securities

Stock-broking firm, HDFC Securities has suggested investors to buy stock of Galaxy Surfacts, a leading specialty chemical company. The brokerage firm is of the view that the price will rally by 35.64 going ahead. As recently the company posted its quarterly numbers, considering them the stock broking firm gave its positive view after tweaking previous estimates.

Revenue Declined
Galaxy Surfactant's Q4 revenue declined by 10/8% QoQ/YoY to Rs 9.7 billion, owing to deteriorating volume and realisation for the specialty care business. The contraction in specialty care volumes was due to the slowdown in developed markets. Demand in India remained resilient and is improving for premium categories.

Margin Improvement
Gross margin improved 82bps QoQ and remained flattish YoY at 32%, owing to a decline in raw material prices. Operating expenses declined 7/18% QoQ/YoY owing to a reduction in freight cost and power and fuel cost. EBITDA remained flattish QoQ/YoY at 14%.

Valuation & Rating
Easing inflation along with the normalisation of geopolitical dynamics holds the key for global demand to make a comeback, suggested HDFC securities and further changed the estimates. "We tweak our FY24/25 EPS estimates by 1.2/2.9% to Rs 93.3/116.0 to factor in the overall FY23 performance. Based on DCF, our price target is Rs 3,415 (WACC 10%, terminal growth 4%). The stock is trading at 22x FY25E EPS."

Share Price Movement
The latest market price of this mid-cap chemical stock is Rs 2518.60, it was marginally up by 0.03% on an intraday basis. In the last one year, the share price has declined by 9.55% but over three years it has increased by 91.52%.

Disclaimer
The stock has been picked up from the brokerage report of HDFC Securities. Greynium Information Technologies, the author or the brokerage firm will not be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.