Galaxy Surfactants Rs 937 crore IPO in progress, should you subscribe?

 BusinessToday.in        Last Updated: January 29, 2018  | 13:02 IST
Galaxy Surfactants Rs 937 crore IPO in progress, should you subscribe?

Leading surfactant manufacturer Galaxy Surfacants opened its three-day initial public offer (IPO) today.

The shares are available for sale in a price band of Rs 1,470 and Rs 1,480 per equity share. The firm aims to collect Rs 937 crore from this issue.

On Thursday, Galaxy Surfacants collected little over Rs 281 crore ahead of its initial share-sale. The company's IPO committee finalised allocation of 18,99,500 equity shares to as many as 25 anchor investors at Rs 1,480 apiece, also the upper price band for the offer. At this price, the total amount works out to be Rs 281.13 crore.

HDFC Trustee Company Ltd -HDFC Equity Savings Fund, ICICI Prudential Equity Income Fund, Abu Dhabi Investment Authority - Behave and HSBC Global Investment Funds - Indian Equity were among its anchor investors.

The company plans to issue up to 6,331,674 equity shares of face value of Rs 10 each for cash. The offer consists of an offer for sale of up to 39,250 equity shares by the promoter selling-shareholders up to 2,107,804 equity shares by the promoter group selling-shareholders and up to 4,184,620 equity shares by the other selling-shareholders.

ICICI Securities, Edelweiss Financial Services and J M Financial Institutional Securities will manage the company's public issue.

The equity shares are proposed to be listed on BSE and NSE. This is the company's second attempt to go public. Earlier in 2011, Galaxy Surfactants entered the capital markets to raise over Rs 200 crore through an initial public offer (IPO). However, it withdrew from the IPO market due to tepid response from investors. Galaxy Surfactants is one of India's leading manufacturers of surfactants and other speciality ingredients for the personal care and home care industries.

 

The company's diversified customer base currently comprises multinational, regional and local FMCG companies, including, Cavinkare, Colgate-Palmolive (India), Dabur India, Henkel, Himalaya, L'oreal, Procter & Gamble, Reckitt Benckiser, Ayur Herbals, Jyothy Laboratories and Unilever. Currently, it has seven strategically located manufacturing facilities, out of which  five are located at Tarapur and Taloja in Maharashtra; and Jhagadia in Gujarat and two are located overseas in the US and Egypt.

Here's how some brokerages rated the issue

 

Geojit: Subscribe

Galaxy Surfactants Ltd (GSL) is one of India's leading manufacturer of surfactant and other specialty ingredients which are used in manufacturing of final products like personal and home care. Over the years, GSL has significantly expanded and diversified its product profile, client base and geographical footprints emerging as a global supplier to major FMCG companies like Cavinkare, Colgate-Palmolive (India), Himalaya, Dabur, Jyothy lab etc. The company has demonstrated strong financial performance in the recent years.


During FY15-17, Revenue, EBITDA and PAT grew at a CAGR of 7%, 19% and 35% respectively. Moreover, GSL has managed to deleverage, reducing its D/E ratio from 1.2x in FY15 to 0.7x in FY17. Additionally, the company has been continuously delivering positive return ratios over the last five fiscals. In FY17, GSL's RoE and RoCE stood healthy at 29% and 17% respectively. Management's focus on high margin speciality care segment, foray into new product categories backed by strong R&D capabilities provides ample scope for further improvement in its revenue generation.

Company's strong manufacturing capabilities, established customer relationship and robust product portfolio leave them uniquely positioned to exploit the opportunities offered by personal and home care segments in India and AMET (Africa Middle East Turkey) region.  At an upper price band of Rs 1,480, GSL is available at a P/E of 35x on H1FY18 annualised EPS. We recommend 'Subscribe' to the issue, with a medium to long term perspective.

 

India Notes: Subscribe


The firm is bringing the issue at price to earnings multiple of 35 on annualized H1FY18 eps at higher price band of Rs 1470-1480/share. The company being and established global supplier to major FMCG brands with demonstrated track record has robust product portfolio & proven R&D capabilities with strong presence in high growth markets of India and AMET region. Looking after strong fundamentals & financial performance of co, we recommend "Subscribe" on issue.

 

Centrum Broking: Listing gains possible

The company has decent set of financials (FY14-17 revenue and PAT CAGR of 8% and 24%, respectively, EBITDA margins of 12%, RoE of 25% and positive free cash flows). "Given the decent financials and future growth prospects, the IPO could garner interest in the current market environment. Hence, we believe that despite fair valuations, the listing may still be at a premium to the offer price," the brokerage said in a report.


(With PTI inputs)

 

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