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Systematix Report
Systematix believes Gulf Oil Lubricants Ltd.'s current valuation remains compelling, with the stock trading at 12.0x/10.9x on FY27E/FY28E EPS, backed by robust ROE/ROCE of 25%+ and a dividend yield of ~5-6%.
The brokerage keeps its PER based multiple unchanged at 15x and come out with a revised target price of Rs 1,601 (earlier Rs1,475) and maintain Buy rating on the stock.
Gulf Oil Lubricants India delivered a record operational performance in Q1 FY27, driven by exceptional volume growth and strong execution amid a challenging operating environment of sharp input cost inflation and supply disruptions.
Revenue grew ~32.5% YoY/~26.9% QoQ to ~Rs 1,320 crore, beating our estimate by 21.6%, supported by 17% YoY core lubricant volume growth to 48KL. This growth came across segments, aided by continued brand strength, proactive customer engagement and uninterrupted supplies.
Driven by 19% higher realisation, gross profit increased ~27.2% YoY, although gross margin moderated due to elevated crude-linked base oil prices and raw material shortages. Nevertheless, favourable business mix, disciplined cost management and calibrated pricing actions helped preserve profitability, with Ebitda rising 34.6% YoY/26.1% QoQ to ~Rs 170 crore, ahead of our estimate by ~22.9%.
Consequently, Ebitda margin remained resilient at ~12.9%, expanding ~20 bps YoY. Adj. PAT stood at ~Rs 130 crore, up ~31.9% YoY/~41.7% QoQ, supported by robust operating performance and sharply lower finance costs during the quarter.
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