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Strong operating performance, driven by volume growth and premium mix Strong beat on our estimates

* Galaxy Surfactants (GALSURF) delivered a strong 2QFY27 performance, with EBITDA surging 72%, while EBITDA/kg jumped 56% YoY to ~INR26, driven by operating leverage, an improved Specialty Care mix, and sustained demand for premium offerings across domestic and international markets.

* Backed by a strong 1H performance and an upward revision in FY27 EBITDA/KG guidance from INR24-25 to INR26-27, we raise our FY27 earnings estimates by 11%. However, we cut our FY28 estimates by 17%, as synthetic surfactants are expected to become more economically attractive than palm-kernel-oil-derived surfactants amid the expected normalization of crude oil prices. Reiterate BUY with a TP of INR2,660 (based on 25x FY28E EPS).

Healthy volume growth supports topline momentum

* Consol. revenue grew 37% YoY to INR18.1b (est. INR15.8b), primarily led by consolidated volumes registering high-single-digit YoY growth, driven by strong mid-teens growth in India and the AMET regions.

* Revenue from India/Rest of World (ROW)/AMET grew 31%/47%/30% YoY to ~INR7.8b/INR4b/INR5.8b. Revenue from local and niche/MNC/regional players grew 37%/37%/37% YoY to INR1.4b/INR8.7b/INR8b.

* The revenue contribution of Performance Surfactants now stands at 65% compared with 63% in 2QFY26.

* EBITDA margin stood at 10.5% vs. 8.3% in 2QFY26, led by a 300bp expansion in gross margin to 27.5%. Employee costs as a % of sales stood at 5.8% (vs. 6.1% in 2QFY26), while other expenses stood at 11.3% (vs. 10.1% in 2QFY26).

* EBITDA stood at INR1.9b (est. INR1.5b), up 72% YoY and Adj. PAT stood at INR1.2b (est. INR868m), up 80% YoY.

* In 1HFY27, revenue/EBITDA/Adj. PAT grew 38%/87%/96% YoY to INR35.9b/INR4.4b/INR2.9b.

* Gross debt stood at INR2.3b as of Sep’26 vs. INR1.6b as of Sep’25.

Valuation and view

* While the macro environment remained challenging in 2Q, marked by significant feedstock volatility, the company’s disciplined execution, supply chain agility, and diversified portfolio enabled it to navigate external headwinds effectively and emerge stronger.

* Going forward, we expect GALSURF’s growth to be driven by

1) the company’s consistent focus on R&D and innovation

2) growing domestic demand led by the recovery in Tier 1 customers

3) likely growth recovery in AMET

4) expanding global operations

5) a strong pipeline of new products.

* We expect a CAGR of 12%/17%/17% in revenue/EBITDA/adj. PAT, along with a volume CAGR of 6% over FY26-28. Backed by a strong 1H performance and the upward revision in FY27 EBITDA/KG guidance from INR24-25 to INR26–27, we raise our FY27 earnings estimates by 11%. However, we cut our FY28 estimates by 17%, as synthetic surfactants are expected to become more economically attractive than palm-kernel-oil-derived surfactants due to the expected normalization of crude oil prices. Reiterate BUY with a TP of INR2,660 (based on 25x FY28E EPS).

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