Buy Gulf Oil Lubricants; target of Rs 1500: Emkay Global Financial

Emkay Global Financial's research report on Gulf Oil Lubricants

We retain our constructive outlook on GOLI, driven by steady core volume growth (7% core volume CAGR over FY24-26E, >2x of the industry growth), and a stable 13-14% EBITDA margin profile supported by focus on premiumization. The new initiatives like EV charging solutions, EV fluids, and data center (DC) cooling liquids are expected to gradually add to the growth. Mgmt. estimates the DC cooling liquid market in India to stand at 12-14mn-ltr by CY26-end (given ~1,7GW of DC capacity; 100% transition to cooling liquids from ACs). Though cooling liquids contributing meaningfully to GOLI’s volumes by CY26 seems unlikely, availability of technical know-how and eventual portfolio addition improve the terminal period outlook.

Outlook

We raise target P/E to 17.5x (vs. 16.5x earlier); besides roll-over to Sep-25E. Reiterate BUY with revised TP of Rs1,500/sh.

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