Buy Gulf Oil Lubricants; target of Rs 650: Emkay Global Financial
Emkay Global Financial is bullish on Gulf Oil Lubricants has recommended buy rating on the stock with a target price of Rs 650 in its research report dated July 27, 2023.
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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Gulf Oil Lubricants – 27 -07 – 2023 – emkay
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