India’s leading speciality ingredients manufacturer, Galaxy Surfactants Initial Public Offer (IPO) to raise up to Rs 937 crore opens for subscription today. Galaxy Surfactants IPO is a complete offer for sale, in which the promotes look to sell 6,331,674 equity shares. At the higher end of the price band, issue would be worth Rs 937 crore. The OFS is being done by some of its pre-issue investors and promoters. The company has set a price band of Rs 1,470-1480 for the issue. The issue will open on 29th of January 2018, and remain open till 31st January 2018. Bids can be made in minimum lot of 10 equity shares and in multiples of 10 shares thereafter. The promoters shareholding will fall by 6% post issue to 71% from 77% pre issue. According to Galaxy Surfactants IPO prospectus, the objects of the offer are to achieve the benefits of listing the equity shares on the stock exchanges and the sale of equity shares by the selling shareholders. While investors maybe mulling whether to subscribe to the issue, we take a look at what top brokerages have to say.
Pointing to the strengths of the company, HDFC Securities notes that Galaxy Surfactants is an established global supplier to Major FMCG brands with demonstrated track record; robust product portfolio addressing diverse customer needs; proven R&D capabilities with dedicated focus on innovation and global footprint supporting local reach. Noting the key concerns of the company, HDFC Securities says that Galaxy Surfactants has high dependence on manufacturing facilities, and the risks associated with manufacturing process and operations and fluctuations in the prices of raw materials.
Angel Broking has a subscribe rating on the issue given the growth potential of the company. “At the upper end of the price band, the P/E multiple works out be 36x (pre issue equity base) of FY17 EPS. The company has seen 25% CAGR in the last 3 years in earnings. We expect the company to maintain a 20%+ growth trajectory in the coming few years, considering growing personal care markets, its increasing product offerings and geographies. We recommend ‘SUBSCRIBE’ on the issue for a mid-to-long term period,” noted Angel Broking.
HEM Securities has a subscribe rating on the issue, given strong fundamentals and financial performance of the company. “The company (Galaxy Surfactants) is bringing the issue at p/e multiple of 35 on annualized H1FY18 eps at higher price band of Rs 1470-1480/share. Company, being 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,” the research firm noted.