Buy Gulf Oil Lubricants; target of Rs 1800: Emkay Global Financial

Emkay Global Financial's research report on Gulf Oil Lubricants

GOLI’s Q3FY25 core lube volumes grew 7% YoY (in line), while AdBlue was up 16% YoY (recovery QoQ, a 9% beat). EBITDA was slightly 1% below estimate on higher opex, while APAT was 4% lower due to higher finance cost from forex losses. EBITDA margin was steady at 13.5% in Q3 and within the management’s guided range of 12-14%, whereas gross margin improved by 40bps QoQ to 42.4%. Management maintained its volume growth guidance at 2-3x of industry, besides the focus on premiumization (13-14% YoY volume growth in Q3). Tirex’s 9MFY25 revenue was Rs400mn (up 3x YoY) with breakeven EBITDA.

Outlook

We slightly tweak FY25-27E EPS by 2-3% each given 9MFY25 run rate and building in higher finance cost amid a weak rupee. We keep our TP unchanged at Rs1,800 (at 20x Dec-26E target PE) and retain BUY on GOLI.