Galaxy Surfactants Ltd. (GSL), one of the leading manufacturer of surfactants and other specialty ingredients in India, will launch its maiden IPO soon. In May 2011, the company wanted to hit the market for around Rs 120 crore but had to withdraw due to bad market condition.
The lead managers to that IPO was different. However, this did not affect its expansion plans as it got the required funding from IFC and have proved their mettle with improved performances thereafter. Over the years, GSL has significantly expanded and diversified its product profiles, client base and geographical footprints. Currently its product portfolio comprises over 200 grades which are marketed to more than 1,700 customers in over 70 countries. GSL is supplying its products to FMCG companies in India such as Cavinkare Pvt. Ltd., Colgate Palmolive, Dabur India, Henkel, Himalaya, L’OREAL, Procter & Gamble, Reckitt Benckiser, Ayur Herbals, Jyothy Lab and so on. It is exporting its products to Africa Middle East Turkey, Asia Pacific, Americas and Europe FMCG giants as well.
For listing gains, GSL is coming out with a maiden IPO as offer for sale of 63,31,674 equity shares of Rs 10 each via book building route with a price band of Rs 1,470-1,480 per share to mobilise Rs 930.76 – Rs 937.09 crore (based on lower and upper price bands). No fund is going to company being OFS. Issue constitutes 17.86 per cent of the post issue paid up equity capital of the company. Issue opens for subscription on January 29, 2018 and will close on January 31, 2018. Minimum application is to be made for 10 shares and in multiples thereon, thereafter.
Post allotment shares will be listed on BSE/NSE. BRLMs to this offer are ICICI Securities Ltd., Edelweiss Financial Services Ltd. and JM Financial Institutional Securities Ltd. Link Intime India Pvt. Ltd. is the registrar to the issue.
On performance front, GSL has (on a consolidated basis) posted turnover/net profits of Rs 1,701.58 crore / Rs 76.00 crore (FY14), Rs 1876.03 crore / Rs 67.46 crore (FY15), Rs 1,808.76 crore / Rs 102.72 crore (FY16) and Rs 2,171.70 cr. / Rs 146.31 crore (FY17). For first half of current fiscal, it has reported net profit of Rs 75.16 crore on a turnover of Rs 1,197.28 crore. According to management, due to GST (Goods and Service Tax) and LBT (Local Body Tax) implementation, it had some impact on its working for the first half of the current fiscal, but now everything has stabilised. Issue is priced at a P/BV of 8.26 based on its NAV of Rs 179.11 as on September 30, 2017.
It has no listed peers to compare with, thus it is a first mover in this segment. If we annualise latest earnings and attribute it on the post issue equity, then asking price is at a P/E of around 35. GSL has posted 24.40 per cent CAGR in profit after tax for FY14 to FY17. It will attract first mover fancy in this segment which is very lucrative and has bright prospects going forward.
