Accumulate Gulf Oil Lubricants; target of Rs 760: Dolat Capital Market

Dolat Capital Market recommended accumulate rating on Gulf Oil Lubricants with a target price of Rs 760 in its research report dated November 09, 2020.

Broker Research

November 12, 2020 / 13:48 IST

26 Aug, 2025 12:21

Volume

Todays L/H

Dolat Capital Market's research report on Gulf Oil Lubricants

GOLI’s revenue were above our estimates on revenue and profitability front. Increase in demand from 2W and CV segment contributed to strong volume growth. Also, B2B and industrial segment saw strong growth. PCMO segment is picking up slowly. Volume in Q2FY21 was 29.5 TKL grew 7% YoY and by 68.6% QoQ against our estimate of 24TKL. Factory fill business which was a laggard from last many quarters have started showing growth and have contributed around 5% to the mix. Gross margins contracted by 96 bps YoY and expanded 248 bps sequentially due to reduced traction from B2C to 61% (normal 63-64%). All the trade schemes announced in the previous quarter are called back. Net realisations were down 9% YoY and up 1.3% QoQ to Rs 139.6/L. EBITDA margins expanded 105 bps YoY due to favourable input costs and other costs prudence. Management has guided to maintain margins at 16-18%. GOLI expects to grow at 2-3x of the industry, however, they expect the industry to have a double digit de-growth in FY21. However, with strong volumes coming in, strong supply chain, distribution strength and continuous investments in branding activities they expect a positive H2FY21 for GOLI.

Outlook

The volume growth will continue to outperform the industry from FY22, where growth will come from new product launches, OEM tie ups and expansion of distribution channels. Maintain Accumulate, with a TP of Rs 760 based on 15x FY23E earnings.

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