ICICI Securities's research report on Gulf Oil Lubricants India
Gulf Oil (GOLI) reported a stellar set of Q4 numbers with EBITDA/PAT growth of 31%/37% YoY, its second-best in the last eight quarters (barring the low base driven growth seen in Q1FY23). Volume growth of 15.6% YoY was also solid and has been delivering as per management’s guidance of above-industry/peer growth over the next two–three years. Core lubricant/Adblue volumes of 37mn litres each (+2.8/32.1% YoY) were broadly in-line, but EBITDA margin of 13.7% (highest in eight quarters, up 260bps YoY/20bps QoQ) was a pleasant surprise. We continue to remain positive on GOLI’s prospects over the next two–three years, with steady volume growth, stronger margins and limited threat from EVs at least in the next three–five years. Valuations of 13.2x FY26E EPS/ 8.7xEV/EBITDA are attractive. Maintain BUY.
Outlook
We see scope for material re-rating ahead. Our target price, derived from an average of FY27E PER, EV/EBITDA and an assumed PEG ratio, delivers a fair value of INR 1,315/sh (we assign PER multiple of 15x. EV/EBITDA of 9.5x). We note that even our target multiples are at a steep discount to the nearest comparable peer Castrol (refer Exhibit 21)
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