Buy Gulf Oil Lubricants; target of Rs 800: HDFC Securities

HDFC Securities' research report on Gulf Oil Lubricants

Gulf Oil reported encouraging volume growth of 7% YoY in 2QFY21, as it benefitted from pent-up demand. The share of high-margin personal mobility increased to 24% (from 20% in 1QFY21) as volumes recovered, resulting in a multi-quarter high EBITDA margin of 19%. Further, Gulf has collaborated with a renowned Korean company ‘S Oil’ to expand its presence in the personal car segment. We reiterate BUY and continue to value the stock at 20x P/E.

Outlook

We revise Sep-22 target price to Rs 800 as we marginally raise FY22/23 earnings by 2%. Key risks: increased competition and a slower-thananticipated recovery.