Despite prevailing uncertainties caused by recessionary fears in Europe and US, as well as weakened consumer sentiments affecting discretionary demand and channel destocking, management is confident of achieving 6–8 percent volume growth, followed by stronger PAT growth.

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Nuvama in a research report said it is positive on Galaxy’s FMCG-led business model and believes that current weakness is transitory. The brokerage expects growth rebounding in second half of FY24 in Egypt, Turkey and Europe.

Galaxy Surfactants recognises that the current environment is challenging and faces multiple headwinds. Though FY23 benefited from a rising price scenario, helping the company improve its EBITDA/mt. FY24 is likely to be adversely affected by a cut in consumer spending across the markets given recessionary fears. Furthermore, the current slowdown in US and Europe has triggered consumer downtrading, which has adversely affected its specialty chemical product basket. As specialty enjoys higher margins, any further slowdown can result in margin pressure.

Its focused oleochemicals-based product basket is a strong beneficiary of the

global trend of moving towards clean/green chemistry. Emerging trends such as consumers choosing liquid dish wash over bars, increasing adoption of washing machine in fabric care, growing consumer awareness in harmful chemicals etc. are driving-factors for Galaxy’s growth. Inventory destocking has moderated and raw material prices have also stabilised.

Nuvama has a buy rating on the stock with a target price of Rs 3,972. The stock closed the trading session on June 16th with gains of 2 percent at Rs 2,880 per share.

(Edited by : Vahishta Unwalla)