Why Analyst Sees This Midcap Stock Going Up Over 30%

Shares of Galaxy Surfactants have been under pressure ever since it posted its results for the quarter ended June. Analysts at HDFC Securities noted that the company’s number missed its estimates but are hopeful for a turnaround.

The Galaxy Surfactants Analyst: The analyst team at HDFC Securities led by Nilesh Ghuge maintained the ‘buy’ rating on the stock raising the price target to ₹3,496 from ₹3,415. The target indicates an over 31% upside from the stock’s last closing price of ₹2,667.25.

The Galaxy Surfactants Thesis: The domestic brokerage firm noted that the company’s EBITDA and Adjusted profit after tax were 4% and 10% lower than its estimates, respectively. As per analysts, the miss was mainly owing to a fall in revenue.

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The company’s revenue fell 18% to ₹941 crore in the June quarter as compared to the ₹1,158 crore it reported in the same quarter last year.

Despite the above points, the analysts mentioned two reasons behind their ‘buy’ recommendation.

  1. The resilience of the business, with more than 50% of its revenue sourced from multinational corporations.
  2. The company’s capacity to transfer variations in raw material expenses to its clientele.

Price Action: Galaxy Surfactants’ share price was down 0.72% to trade at ₹2,648 in early trade on Monday.

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Posted In: Analyst ColorPrice TargetReiterationAnalyst RatingsGalaxy SurfactantsHDFC Securities