ICICI Securitie's research report on Gulf Oil Lubricants India
Overall, volume of 75mn litres grew 15.4% YoY with core lubricant volume of 37mn litres (up 5.7% YoY) and AdBlue volume of 38mn litres (up 26.7% YoY) vs our estimates of 38/41mn litres respectively. The company remains on track to meet its guidance of superior industry growth over the next couple of years. Additionally, with an aggressive build-out of distribution infrastructure, brand spends, new product launches and new segment entry, GOLI is emplacing the building blocks for sustained growth over the next 3-5 years.
Outlook
Gulf Oil (GOLI) reported another stellar set of results in Q1FY25, with EBITDA/PAT growth of 25.3%/28.9% YoY, its second-best in the last eight quarters. Volume growth of 15.4% YoY was also solid and it has been delivering as per management’s guidance of above-industry/peer growth over the next 2-3 years. Core lubricant/Adblue volume of 37/38mn litres (+5.7/26.7% YoY) was marginally below our estimates, with Adblue volumes a tad weaker. Gross margin was up 40bps QoQ, but EBITDA margin was down 20bps to 13.1% due to higher SG&A expenditure. We remain positive on GOLI’s prospects over the next 2-3 years, with steady volume growth, stronger margins and limited threat from EVs, at least, in the next 3-5 years. Valuation of 14.3x FY26E EPS/ 9.5x EV/EBITDA is attractive. Maintain BUY.
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