Goal ₹730

CMP: ₹523.80

We visited Gulf Oil India Ltd’s Chennai facility, which may deal with 50/18mn-ltr p.a. of core lubricant/AdBlue volumes (about 35 per cent of GOLI’s core lubes put in capability), assuming double shifts. GOLI has deployed computerized batch mixing expertise from ABB, France to optimise lead time in operations. Notably, GOLI is able to working the Chennai facility at >100 per cent utilisation ranges (three shifts), moreover probably doubling capability inside its current land parcel.

The Chennai facility homes an R&D centre, centered on creating new blends, alternate formulations, and many others. GOLI has additionally efficiently undergone stringent audits from US- & EU-based OEMs. Mgmt. reiterated volume-growth steerage of 7-8/15-20 per cent for core/AdBlue in FY24, with goal EBITDA margin of 12-14 per cent, supported by concentrate on lengthy drain merchandise, strategic pricing selections, branding, and many others.

We worth GOLI utilizing the DCF evaluation. Our TP implies 11.3x Mar-25E goal P/E. GOLI’s earnings outlook stays regular on sturdy quantity CAGR, scale-up of AdBlue and gradual easing of enter value pressures. We take a constructive long-term view on the sector (discuss with ‘Outlook for Indian lubricants regular’). The inventory trades at a sexy valuation of about 8x FY25E earnings, mixed with a wholesome about 6 per cent dividend yield.

Key dangers: Adversarial base-oil costs/forex fluctuation; competitors; technology-based change

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