Emkay Global Financial's research report on Gulf Oil Lubricants
We attended Kline’s ‘Shining Bright’ conference on the Indian lube sector which saw participation by major players. Key takeaways & our understanding of the sector: 1) The Indian lube market should see 2% volume CAGR in coming 10 years. 2) Value growth would be higher at 5-6%. 3) Industrial segment will play a larger role, and offer multiple opportunities and new-segment prospects. 4) MCO would see EV impact (possibly 100% by CY40), but PCMO should fare better. 5) Domestic base-oil capacity would improve in 3-4 years, with ~70% availability vs ~30% now. 6) Usage of recycled oils should expand and become cost economical, thereby benefitting lube players.
Outlook
Overall, our positive view on GOLI is reaffirmed. Stock trades at undemanding PER of 8-9x FY24-25E EPS, with >20% sustainable ROE/6-7% div. yield. We reiterate BUY; TP: Rs650.
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