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    Galaxy Surfact.

    GALAXYSURF
    Chemicals·13 Nov 2025
    Management Summary

    Galaxy Surfactants faced a challenging Q2 FY26 with flat consolidated volumes and a 5% YoY decline in H1 EBITDA, primarily due to adverse US tariffs, elevated fatty alcohol prices, and temporary GST-related inventory adjustments in India. While Mass Specialties and certain international regions showed growth, Performance Surfactants declined. The company is adapting by developing alternate surfactants and exploring shifting production to Egypt to mitigate tariff impacts, expecting India recovery from Q4 FY26.

    Highlights

    5
    • H1 FY26 consolidated revenues grew 2% year-on-year.

    • Mass Specialties (non-US geographies) clocked double-digit volume growth in Q2.

    • Latin America and Asia Pacific maintained strong growth with double-digit YoY gains.

    • Super Specialty prestige segment (TRI-K) continued to perform well.

    • Market share gains registered in India with non-Tier 1 accounts.

    Concerns

    6
    • H1 FY26 EBITDA declined by 5% year-on-year.

    • Q2 Performance Surfactants registered a high-single-digit decline.

    • US tariffs (additional 50%) adversely impacted existing business and pipeline projects, with a full-year impact of 3% to 5% of FY25 EBITDA.

    • Elevated fatty alcohol prices adversely impacted volumes in India and led to reformulation shifts.

    • Temporary headwinds in India due to GST rationalization causing inventory adjustments.

    • AMET region recorded a modest single-digit volume decline QoQ and high-single-digit YoY due to intensified competition in Egypt.

    Key financials

    Metrics

    5

    Periods

    3

    Headline

    2
    • Consolidated Revenue
      YoY+2%
    • Consolidated EBITDA
      ₹251 Cr
      YoY-5%

    Q2 FY26

    2
    • EBITDA per metric ton
      ₹17,300
    • Consolidated Volumes
      YoY0%QoQ0%

    H1 FY26

    1
    • EBITDA per metric ton
      ₹18,700

    Capital allocation

    1
    medium confidence
    CategoryHeadline
    Capex

    Capex disclosed

    Guidance & targets

    4
    CategoryTargetPriority
    Volume
    India Numbers Improvement
    steady improvement
    High
    Product Commercialization
    Reformulation Approvals & Commercialization
    approvals to come in this quarter and business to commercialize
    High
    Profitability
    Q3 Performance
    similar to Q2
    High
    Financial Impact
    US Tariff Impact on EBITDA
    3% to 5% of FY '25 EBITDA
    High

    India Volume Recovery

    from Q4 FY26
    CurrentFlat volumes due to GST adjustments and reformulation
    TargetGradual but steady recovery

    Why it matters

    India is a key domestic growth engine, and its recovery is crucial for overall volume and revenue growth.

    While the short-term disruption came as a surprise given that nobody was anticipating rationalization of GST rates, we remain confident of a gradual but steady recovery once the adjustments get done with. We're seeing the first signs of the same in November and basis the discussions with our large customers, we do expect the same to continue.

    How to verify

    key_financials.metrics[label='Consolidated Volumes (Q2 FY26)']

    Risks & concerns

    6
    RiskSeverity

    US Tariffs on Indian Exports

    Additional 50% tariffs adversely impacting existing business and pipeline projects, with a full-year impact of 3-5% of FY25 EBITDA.Management acknowledged

    high

    Elevated Fatty Alcohol Prices

    Persistently high prices hurting business, leading to reformulation shifts in India and AMET regions.Management acknowledged

    high

    GST Rationalization Impact in India

    Temporary headwinds due to inventory adjustments by large FMCG players, impacting Q2 and festive season volumes.Management acknowledged

    medium

    Intensified Competition in Egypt

    Competition from backward-integrated local players leading to market share erosion in the AMET region.Management acknowledged

    medium

    Supply Chain Disruptions

    Shipment delays due to ongoing port congestion and blank sailings.Management acknowledged

    low

    Inflationary Impact on Consumer Demand (US)

    Murmurs of inflation causing customers to delay commercializing projects in the pipeline.Management acknowledged

    medium

    Q&A highlights

    8

    “So this is more in terms of the demand environment for all our customers not being so healthy in India, coupled with the inflationary impact, they're all trying to see how they are able to manage the short-term. And that's why we're very clear that this is not structural. ... And probably, I think we see that in India, we could have done in the quarter, about 3,000 to 4,000 tons higher volume if this reformulation had not happened.”

    Clarifies that reformulation is a short-term response to inflation, not a structural shift, and quantifies its immediate volume impact in India.

    asked by Sanjesh Jain

    2 min read6 chapters

    Detailed Narrative

    01

    Q2 FY26 Performance Overview

    Galaxy Surfactants reported flat consolidated volumes year-on-year and quarter-on-quarter for Q2 FY26. H1 FY26 consolidated revenues grew 2% YoY, but EBITDA declined by 5% YoY to INR251 crores. The EBITDA per metric ton stood at INR18,700 for H1 FY26 and INR17,300 for Q2 FY26. Performance Surfactants registered a high-single-digit decline, while Mass Specialties (driven by non-US geographies) achieved double-digit volume growth.

    02

    Impact of US Tariffs and Mitigation Strategies

    The US government's imposition of an additional 50% tariff on Indian exports significantly impacted Galaxy's business, affecting both existing operations and pipeline projects. The cumulative impact for the full year is estimated to be 3% to 5% of FY25 EBITDA. To mitigate this, the company is actively working on shifting production of certain products to its Egypt plant, with some material already shifted and customer approvals in progress. Additionally, resources are being diverted to build pipelines in Latin America, APAC, and Europe.

    03

    Challenges in India Market and GST Impact

    The India market faced distinct challenges in Q2 FY26. While the rationalization of GST rates is structurally positive, it led to temporary inventory adjustments by large FMCG players, causing softer uptake and subdued volumes. This recalibration adversely impacted volumes, with effects continuing into the festive season. Management expects a gradual but steady recovery once these adjustments are complete, with initial signs observed in November.

    04

    Reformulation Due to Elevated Fatty Alcohol Prices

    Persistently high fatty alcohol prices have significantly impacted the business, accelerating reformulation shifts towards petrochemical-based ingredients, particularly in the performance segment. This led to an estimated 3,000-4,000 tons lower volume in India for the quarter. Management views this as a temporary, not structural, issue, noting that such reformulations typically reverse within 12-15 months once oleochemical prices correct and stabilize.

    05

    Regional Performance Variances

    The AMET region recorded a modest single-digit volume decline QoQ and a high-single-digit decline YoY, primarily due to intensified competition in Egypt from backward-integrated local players and reformulation. In contrast, Latin America and Asia Pacific maintained strong growth, delivering double-digit YoY gains across both Performance and Specialty Products segments, partially offsetting declines in other regions. North America saw a decline due to reciprocal tariffs impacting demand and margins in the Specialty Care segment.

    06

    New Product Development and Capacity Expansion

    Galaxy is actively developing alternate surfactants to address reformulation trends, with requisite approvals and commercialization expected from Q4 FY26. The company also launched five new products in the Sun Care range (second-generation sunscreen molecules) in November 2025, receiving positive customer feedback. Capital Work-in-Progress (CWIP) stood at INR260 crores as of FY25, primarily for projects initiated 1.5 years ago in India and Egypt, which are now nearing fruition.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.