ICICI Direct's reserach report on Gulf Oil LubricGulf Oil Lubricants (GOL) reported an 8% QoQ increase in revenue to | 248.8 crore in Q2FY16, above our estimate of | 239.2 crore on account of higher than estimated volumes and higher realisations EBITDA at | 38.6 crore increased 11.6% QoQ (our estimate: | 38.1 crore) mainly on account of higher-than-expected gross margins. Gross margins at | 111.4 crore were above our estimate of | 104.5 crore (| 102.5 crore in Q1FY16). Reported EBITDA margin increased 54 bps QoQ at 15.5% in Q2FY16 Subsequently, reported PAT during the quarter increased 15.4% QoQ to | 23.6 crore. (our estimate: | 23.3 crore) GOL’s strong focus on product innovation, advertising, marketing, retail distribution and OEM tie-ups have enabled the company to increase its market share, particularly in the automotive lubricant segment. GOL’s strong focus on personal mobility has led to an increase in its market share in the bazaar trade segment from 4.4% in FY07 to 7% in FY15, which will remain the key driver for the automotive lubricant business. New OEM tie-ups through aggressive marketing are also expected to help GOL gain market share in the industrial segment and create shareholder value. We value Gulf Oil Lubricant at ~25x FY17E EPS of | 20.9 to arrive at a target price of | 520 with a HOLD recommendation. For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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