Gulf Oil Lubricants India Ltd. share price target

We recently met the management of Gulf Oil Lubricants. The company remains optimistic on growth outperformance driven by investment in brand, increasing distribution footprint, and new product launches. 1HFY17 comparable volumes grew by ~13%. Demonetisation has led to growth challenges for the lubricant industry. However, over the next 2 quarters growth should bounce back.

EBITDA increased 13.6% YoY at | 43.8 crore (our estimate: | 43.5 crore). EBITDA was at | 21.6 per litre in Q2FY17 against | 21 per litre in Q2FY16, in line with our estimate of | 21.7 per litre PAT during the quarter increased 27.7% YoY to | 30.2 crore and...

The results were above our estimates with a PAT beat of 14%. Revenues at INR283cr (est INR 239cr) increased 23% YoY driven by (i) a one off institutional order which contributed 8% of growth, (ii) core growth of 16%. B2C growth jumped to low double digits from 3% in 4QFY16. Gross margins expanded by 320bp YoY and 90bp QoQ on the back lower raw material costs. EBITDA Margin at 17.1% is up 210bp YoY & 50bp QoQ. EBITDA at INR 48.5cr grew by 41%...

ICICI Securities Ltd | Retail Equity Research Gulf Oil Lubricants reported 23.1% YoY increase in revenues to | 283.6 crore, above our estimate of | 244.3 crore due to higher volume growth of ~30% vs. estimate of 7.5%. Excluding an institutional order, volume growth was at 16% in Q1FY17 Subsequently, the EBITDA increased 40.5% YoY to | 48.5 crore (our estimate: | 36.9 crore). The EBITDA per litre was at | 22 per litre in Q1FY17 vs. | 20.3 per litre in Q1FY16 (our estimate: | 20.2 per litre)...

The results were broadly in line with ourestimates. Revenues at INR271cr increased 3% YoY mainly driven by volume growth of 10%. B2B volumes jumped 21%, aided by new tie-ups with OEMs. B2C growth was at a 3% vis-a-vis industry growth of 1%. Gross margins expanded by 600bp YoY and 90bp QoQ on the back lower raw material costs....

ICICI Securities Ltd | Retail Equity Research Gulf Oil Lubricants reported a 3.1% YoY increase in revenues to | 271.9 crore, above our estimate of | 264.6 crore on account of...

Gross margins expanded by 570bp YoY and 100bp QoQ on the back lower raw material costs due to a fall in base oil prices by 31% YoY. EBITDA Margin at 15.8% came in-line with our estimate and is up 270bp YoY & 20bp QoQ. Current EBITDA margins would be somewhere near the peak and we expect them to stabilise at current levels of...

Gulf Oil Lubricants (GOL) reported good numbers, with 9.1% YoY revenue growth (at Rs 2.6bn) led by a healthy 13% volume growth. Strong expansion in gross margin (GM) continued ( 696bps to 45.9%) aided by RM tailwinds (base oil prices down ~31% YoY). EBITDA growth ( 28.9%) was healthy, with 243bps YoY rise in EBITDA margin at 15.8%.

We believe GOL is undervalued despite its low leverage, superior return ratios (FY18E RoE ~40.9%), multi-year market share gains, healthy dividend payout (~35%) and growth prospects. We maintain BUY with a TP of Rs 632 (25x 1-year forward rolling EPS).