Galaxy Surfactants, Alkem Labs, KNR Construction, Medplus, Ashoka Buildcon & More Q2 Review: HDFC Securities

HDFC Securities Institutional Equities

Galaxy Surfactants - Premium Speciality to drive growth

Our BUY recommendation on Galaxy Surfactants Ltd. with a price target of Rs 3,466 is premised on-

1. the global home and personal care leaders having raised the volume growth outlook for 2024 after strong volumes in YTD;

2. demand for premium specialty care products expected to rebound as demand in Europe and North America rebounds with the easing of inflation and the end of inventory destocking; and

3. demand in RoW markets continuing.

Q2 Ebitda/adjusted profit after tax were 30/38% above our estimates owing to higher-than-expected revenue and offset by higher-than-expected raw material cost.

HG Infra - Weak Performance

HG Infra Engineering Ltd. reported its quarterly revenue/Ebitda/APAT of Rs 10.6 billion/1.7 billion/886 million, a miss by 21/17.5/17.4%. The order book as of Sep’24 stood at Rs 166.2 billion (~3.2x FY24 revenue). The company has maintained its FY25 revenue guidance at Rs 60 billion (~17% YoY) with an Ebitda margin of ~15-16%.

On the order inflow front, the company expects Rs 110-120 billion. It has already secured orders worth Rs 62.8 billion (Rs 55 billion from highways and Rs 7.8 billion from Solar) and is on track to achieve FY25 guidance.

HG recently made a pivotal shift in its order book inflows from road to railways indicating its robust diversification strategy, and it further expects to diversify in the water segment by securing new orders.

Equity infusion guidance for H2 FY25/26/27 stands at Rs 3.7/ 1.7/ 1.31 billion. The standalone gross/net debt as of Sep-24 stood at Rs 8.8/7.7 billion versus Rs 6.2/5.1 billion, as of June-24. Given robust order book, likely pick-up in project execution and a healthy balance sheet, we maintain Buy on HG, with target price of Rs 1,904 (16 times 1- yr forward).

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