share price jumped over 6% on Thursday, 1 October, amid 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.
Nuvama also raised its FY27 and FY28 earnings-per-share () estimates by 13.4% and 11.5%, respectively. The stock currently trades at around 19.3x FY28E EPS, according to the brokerage.
Rising crude prices trigger shift towards oleochemicals
Nuvama expects Galaxy Surfactants to benefit from crude oil prices remaining above $100 per barrel. The brokerage said the industry has undergone a reformulation shift from crude-based to oleochemical-based surfactants, increasing the use of oleochemicals in home and personal care products.
Galaxy’s surfactants are palm-based, while competing alternatives such as LABSA and certain SLES/SLS routes are linked to crude-derived raw materials. As crude prices rise, the cost advantage of oleochemical-based formulations improves, supporting Galaxy’s profitability per tonne.
Nuvama expects Galaxy’s per tonne to remain at around ₹24,000–25,000 in FY27 and FY28, compared with its earlier assumptions.
AMET recovery could support volume growth
The brokerage also expects volumes in Africa, Middle East and Turkey (AMET) to gradually recover.
AMET volumes, which peaked at around 90,000 tonnes in FY21, are currently at about 60,000 tonnes. Nuvama noted that disruptions since FY24 have largely been supply-led rather than demand-led.
Galaxy’s AMET volumes declined 4% in Q1 FY27 after raw materials were held at Egyptian ports for seven weeks. However, 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. Management has also cited AMET recovery as a factor supporting confidence in the upper end of its 6–8% volume growth guidance.
Leave-on products offer higher-margin growth
Another key part of Galaxy’s growth strategy is its expansion into leave-on categories, including skincare, sun care, cosmetics and dermatology.
The company already has products in sun care, emollients, preservatives, and shower oil applications. Nuvama expects newer products such as emollients, esters and peptide-collagen ingredients to generate EBITDA of around ₹35,000–45,000 per tonne, significantly above the company’s broader EBITDA-per-tonne estimates.
The brokerage believes Galaxy’s R&D focus on mild surfactants, non-toxic preservation, emollients and esters could help expand its presence in higher-value applications such as sun protection, anti-ageing and dermatology.
Vision 2030 targets 2x volumes and 2.5x EBITDA
Galaxy’s Vision 2030 remains another key driver of growth. Management is targeting a doubling of volumes and a 2.5x increase in EBITDA by 2030.
According to Nuvama, around 50% of growth is expected to come from organic expansion, 30% from new products and categories, and 20% from acquisitions.
The brokerage also 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.
What are the key risks?
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.
Overall, the brokerage sees a combination of higher crude prices, reformulation towards oleochemicals, AMET volume recovery and expansion into higher-margin leave-on categories supporting Galaxy Surfactants’ earnings outlook. It has therefore reiterated its ‘Buy’ rating and raised the target price to ₹3,265 from ₹2,927.
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