Galaxy Surfactants Limited — Q3 FY26 earnings call

Call held 16 Feb 2026

Management summary

Galaxy Surfactants navigated a challenging Q3 FY26 marked by reformulation pressures in India and a significant volume decline in AMET. Despite these headwinds, the company achieved a 13% YoY growth in Q3 EBITDA before exceptional items, driven by strong specialty segment performance and improved contribution realization. A key positive development was the reduction of U.S. tariffs on Indian exports, expected to boost future growth, while new product commercialization is set to begin in Q4 FY26.

Highlights

  • Q3 FY26 EBITDA before exceptional items increased by 13% YoY to INR 124 crores, up from INR 110 crores in Q3 FY25.

  • EBITDA per metric ton improved by 15% YoY to INR 20,156 compared to INR 17,527 in the previous year.

  • Specialty segment delivered high single-digit volume growth, offsetting declines in Performance Surfactants.

  • Reciprocal tariffs on Indian exports to the U.S. reduced from 50% to 18%, restoring competitiveness.

  • Mid-single digit volume growth in India and Rest of World segments for Q3 FY26.

Concerns

  • Performance Surfactants portfolio experienced a high single-digit decline in Q3 FY26 due to reformulation pressures.

  • AMET region recorded a double-digit YoY decline in high teens due to market share losses and competitive intensity.

  • Exceptional items of INR 11.9 crores recognized due to revised calculations for gratuity and leave encashment.

  • Fatty alcohol prices remained buoyant, keeping reformulation risk elevated and impacting product mix.

  • Temporary demand disruption in India from GST rate rationalization in September and October.

Key financials

  1. EBITDA (before exceptional items) ₹124 Cr +12.7%YoY
  2. EBITDA per metric ton ₹20,156 +15%YoY
  3. YTD 9M EBITDA (before exceptional items) ₹376 Cr +0.27%YoY
  4. YTD 9M EBITDA per metric ton ₹19,126 -0.76%YoY
  5. Exceptional Items ₹11.9 Cr
  6. Gross Margin ₹53.5/kg

What they filed

Q1 FY27: revenue up 39.4%, net profit up 110.1% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,063 1,042 1,145 1,278 1,326 +25%1,329 +28%1,315 +15%1,782 +39%
EBITDA128 106 127 124 110 −14%119 +12%122 −4%249 +101%
Net profit85 65 76 79 66 −22%59 −9%62 −18%166 +110%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Performance Surfactants
    -9% Volume Growth
  • Specialty Segment
    9% Volume Growth
  • India (Overall)
    5% Volume Growth
  • India Performance Surfactants
    -4% Volume Growth
  • India Specialty
    35% Volume Growth
  • AMET
    -15% Volume Growth
  • Rest of World
    5% Volume Growth

Guidance & targets

Volume

  • India growth trajectory Volume · Q4 FY26 onwards · Medium confidence gradual improvement
    With the normalization of GST-related adjustments, continued specialty strength and the planned commercialization of alternatives, we remain confident of a gradual improvement in our India growth trajectory.

    — K. Natarajan, Managing Director

  • AMET volume recovery Volume · Q4 FY26 · Medium confidence significant volume traction
    We have recovered significant volume traction in Q4 '25-'26 from most of our customers, which will get reflected in the upcoming quarter's performance.

    — K. Natarajan, Managing Director

  • Specialty segment volume growth Volume · to continue · Medium confidence double-digit volume growth
    And we do see a double-digit volume growth in the specialty segment,, to continue.

    — K. Natarajan, Managing Director

  • Overall volume growth guidance Volume · long-term · Medium confidence 6% to 8%
    See, volume guidance, we talked always about 6% to 8%, ? So it's actually very dangerous to change guidance when things are in such a state of flux. That's the reason why I'm not courageous enough to do that because I don't want to be revising the guidance has to give more clarity. It's not confused, correct? That's the reason I'm not doing it.

    — K. Natarajan, Managing Director

Market Access

  • U.S. tariff impact reflection Market Access · late Q4 FY26 / Q1 FY27 · Medium confidence reflecting from late Q4 and start of Q1 next year
    And as regards to the specialty segment, our existing customer growth pipeline projects are expected to get a good push as regards our North America business, thanks to the tariff reduction and will start reflecting from late Q4 and start of Q1 next year.

    — K. Natarajan, Managing Director

New Products

  • New products commercialization New Products · Q4 FY26 onwards · High confidence from Q4 FY26 onwards
    We have received very favorable response in this regard, and these products will be commercialized from Q4 FY '26 onwards.

    — K. Natarajan, Managing Director

Projects

  • EPC projects commercialization Projects · Q4 FY26 · Medium confidence start in Q4 FY26
    Approvals are underway, and we expect commercialization to start in Q4 FY '26.

    — K. Natarajan, Managing Director

Raw Material Prices

  • Fatty alcohol prices correction Raw Material Prices · from May onwards · Medium confidence start correcting
    But we are hopeful that the fatty alcohol prices should start getting corrected, say, from May onwards, because we do see that structurally with the high season months coming in of palm and palm kernel,, it should start reflecting.

    — K. Natarajan, Managing Director

What to watch in Q4 FY26

Commercialization of new formulations for Tier 1 India accounts

Next year (major impact), Q4 FY26 (start)
Current Approvals underway, business to start anytime now
Target Volume contribution from new formulations

Why it matters

Crucial for recovering volumes in the Performance Surfactants segment in India, which saw a high single-digit decline.

We expect the approval to happen anytime and business should start any time now. But the major impact of that will be felt only in the next year.

Risks & concerns

  • Reformulation pressures in India Performance Surfactants

    high

    Due to persistently high feedstock prices, a key Tier 1 account in India reformulated, causing high single-digit decline in Performance Surfactants volumes and contributions.

    Management acknowledged

  • Reciprocal tariffs by U.S. on Indian exports

    high

    Previously impacted specialty segment contribution and pipeline project conversion, though now reduced from 50% to 18%, which is a positive development.

    Management acknowledged

  • Challenging market conditions in AMET

    high

    AMET recorded a double-digit YoY decline in high teens due to market share losses, heightened competitive intensity, and currency depreciation in key markets like Egypt.

    Management acknowledged

  • Temporary demand disruption from GST rate rationalization in India

    medium

    Caused deferment of purchases and inventory adjustments from end of September into October, impacting the upstream value chain during the festive period.

    Management acknowledged

  • Buoyant fatty alcohol pricing

    medium

    Fatty alcohol prices have stayed at a very high level since last year, keeping reformulation risk elevated.

    Management acknowledged

  • U.S. demand issues flagged by key customers

    medium

    Key customers, particularly in Beauty and Wellbeing, have flagged concerns regarding demand robustness in the U.S. market.

    Management acknowledged

Q&A highlights

3 direct, 1 evasive
AMET Volume Recovery & Peak Volumes Partial
No, we don't expect it to reach the peak because we very clearly have told that we have had a new scenerio competition, where you have a person who is backward integrated and who has also taken share from the Tier 1 customers.In AMET what has happened over the last 2 years as far as the currency availability and the depreciation is concerned in the key market of Egypt. So that is something that will not come back.

Management indicates that AMET volumes will not recover to previous peak levels due to structural changes in competition and currency depreciation in key markets like Egypt, suggesting a permanent shift in market dynamics for that region.

Asked by Sanjesh Jain

India New Formulation Commercialization Partial
We expect the approval to happen anytime and business should start any time now. But the major impact of that will be felt only in the next year.

Clarifies that while approvals for new formulations are imminent, the significant volume impact will only be realized in the next financial year, indicating a delayed ramp-up.

Asked by Sanjesh Jain

Specialty Volume Growth (Double-Digit) Partial
We should be seeing this. Yes,. But then it's all a question of how the customers are going because it's also a situation, where we do not know what contract customers have done for the products already, when those contracts are expiring because everything went into a limbo. Now with all the customers, it looks positive to what extent we're positive, we'll get to know probably in the next call, I'll be able to give more clarity.

While management expects double-digit growth in specialty, they express uncertainty about customer contract renewals post-tariff changes, suggesting potential variability in the pace of recovery.

Asked by Sanjesh Jain

EPC Segment Contribution to Margins Evasive
No, I can only tell you, Sanjesh, that if you look at it on a YTD basis, it is not significant. Since it is with a single customer and with confidentiality arrangement with them, we are not able to reveal the actual number. But I can say that it has not been significant.

Management declined to provide specific details on the EPC segment's contribution due to confidentiality, making it difficult for analysts to assess its impact on overall margins.

Asked by Sanjesh Jain

Gross Margin Improvement in Q3 Direct
No, as I said in my opening remarks, one is our TRI-K, which is into Prestige Specialties did very well. So that is one of the reasons, And the other one is also what we sell from India, There is a mix impact, But as we said, our TRI-K business, which is into Prestige Specialties had a role to play in terms of this being better than what it was in first half.

Explains the Q3 gross margin improvement (from INR 49 to INR 53-53.5 per kg) was primarily due to strong performance in the TRI-K Prestige Specialties segment and a favorable mix impact from Indian sales.

Asked by Arun Prasath

Reformulation Strategies by Customers (Temporary vs. Permanent) Direct
So I can tell you that once prices start getting corrected to some reasonable levels,, we would see that they would revert to what the original formulation was. So these are all temporary adjustments that they are making, ? And that's what even a dialogue with the customers tells us.

Management believes customer reformulations are temporary responses to high feedstock prices and will revert to original formulations once prices normalize, suggesting a potential future recovery in volumes for affected products.

Asked by Archit Joshi

Customer Mix Shift (Tier 2/3 vs Tier 1) Direct
Archit in percentage, obviously denominator has an impact. So if the denominator comes down, the percentage goes up. But that's one part of the explanation. But more importantly, which we have been constantly saying is that we are very deeply entrenched, and a huge amount of engagement with all our Tier 2, Tier 3 and D2C customers.

Management clarifies that while the percentage share of Tier 2/3 customers increased partly due to Tier 1 volume decline, it also reflects a strategic focus and successful engagement with these customer segments, mitigating overall impact.

Asked by Archit Joshi

Fatty Alcohol Prices - Structural Shift? Partial
No, I think whether it's a structural shift, we'll have to wait at least for the next 6 months to understand because it has gone through a cycle of close to 15 months. So we need to see it at least up to next October, ? because there have been too many amount of what do you say, stimuli that are causing prices to respond, ?

Management is cautious about declaring a structural shift in fatty alcohol prices, indicating a need for more observation (at least 6 months) to determine if current high prices are temporary or a new normal.

Asked by Rohit Nagraj

2 min read 6 chapters

Detailed narrative

Q3 FY26 Performance Overview

Galaxy Surfactants reported stable consolidated volumes in Q3 FY26 on a year-on-year basis. EBITDA before exceptional items increased by 13% YoY to INR 124 crores, up from INR 110 crores in Q3 FY25. Consequently, EBITDA per metric ton improved by 15% to INR 20,156 compared to INR 17,527 in the previous year. However, the Performance Surfactants portfolio experienced a high single-digit decline, offset by high single-digit volume growth in the Specialty segment. YTD 9-month EBITDA remained flat at INR 376 crores versus INR 375 crores in the prior year.

Impact of U.S. Tariff Reduction

A significant positive development was the reduction of reciprocal tariffs on Indian exports to the United States from 50% to 18%. This move is expected to restore competitiveness, create a more level playing field, and help rebuild traction in the U.S. market. The company anticipates this positive impact to start reflecting from late Q4 FY26 and into Q1 FY27, accelerating penetration in high-value specialty opportunities and unlocking new avenues for growth.

Regional Performance and Challenges

India's volume grew mid-single digit YoY in Q3 FY26, with Performance Surfactants de-growing by approximately 4% due to reformulation pressures, while the Specialty business delivered over 35% volume growth. The AMET region faced significant challenges, recording a double-digit YoY decline in high teens due to market share losses and competitive intensity. However, the Rest of the World segment performed well, with mid-single digit volume growth, balancing the portfolio and supporting the overall performance.

Product Innovation & Branding

As part of its Strategy 2030, Galaxy launched 5 new second-generation products in the GalSORB and SunBliss ranges in November, designed for high photostability, strong efficacy, and broad-spectrum UV protection. These products have received favorable responses and are expected to be commercialized from Q4 FY26. The company also refreshed its brand identity in January 2026, reinforcing its focus on long-term partnerships, responsible innovation, and sustainable value creation, positioning itself as a future-ready partner.

Raw Material and Demand Outlook

Fatty alcohol prices remained buoyant at high levels since last year, keeping reformulation risk elevated, although a brief softening was observed in November. Management expects fatty alcohol prices to start correcting from May onwards, which could alleviate reformulation pressures. On the demand side, India's performance volumes are expected to increase incrementally, and the specialty segment is projected to continue double-digit volume growth. AMET recovery is a high priority, with significant volume traction expected from Q4 FY26.

Customer Mix and Strategic Focus

The company noted a shift in customer mix, with increased engagement and growth from Tier 2, Tier 3, and D2C customers, which helped mitigate the impact of reformulation by a key Tier 1 customer. This diversification is a stated strategic agenda, enabling the company to maintain growth despite challenges with larger accounts. Management emphasized its ability to serve all segments effectively, adapting to market configurations and ensuring resilience in its business model across various customer sizes and geographies.

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