Buy Gulf Oil Lubricants India; target of Rs 650: YES Securities

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26 Aug, 2025 12:21

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YES Securities' research report on Gulf Oil Lubricants India

The 1QFY23 reported Ebitda at Rs 850mn (+102% YoY; -5% QoQ) stood ahead of our estimates primarily on higher than estimated sales volume, which in-turn was boosted by above-average Ad Blue sales. The sales volume during the quarter stood at a quarterly high of 48mn liters (+75% YoY; +28% QoQ), boosted by 34% YoY growth in lubricant and ~500% YoY growth in Ad Blue sales, While the per unit metrics in 1QFY23 might appear YoY and QoQ weaker, given Ad Blue (41% of 1Q sales) is low realization and low margin product, but in absolute terms GOLI managed to maintain Ebitda margins at 12% (4QFY22: 14%), despite inflationary impact on raw material (base oil) and several other costs heads. Price increase of 3-4% in lubricants taken at beginning as well as at the end of quarter, helped tide over increase in costs. Going ahead, GOLI intends to continue to grow at 3-4x industry growth along with plausible Ebitda margin expansion. In our opinion, markets have heavily discounted GOLI’s growth potential and ability for cash-flow generation in light of the EV narrative, and a disconnect exists to that extent, between perceived and intrinsic valuations. Maintain BUY.

Outlook

We value GOLI at Rs 650/sh on DCF basis, our TP implies a target P/E multiple of 12x FY24e, as against 8.1x the stock is currently trading at.

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Gulf Oil Lubricants India - 080822 - yes