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Buy Gulf Oil Lubricant; target of Rs 1017: Dolat Capital

May 24
07:25 2019

Dolat Capital’s research report on Gulf Oil Lubricant

GOLIL’s revenue and profitability were in line with our estimates. Volume in Q4FY19 grew 10% YoY. While economic factors were slowing down and there was a slowdown in auto sales, GOLIL outperformed the industry by 4-5x in Q4FY19. Sales came from personal mobility, industrial and infrastructure segment. DEO segment had a slowdown. Core sales growth for FY19 was 18% YoY, which came from new customers and new segments. GOLIL has taken adequate price hikes of 2-3% each in December, 2018 and March 2019 to increase realization/L. B2C segment has done well in the quarter. The volume growth will continue to outperform the industry and the management expects to grow at least 3x the industry average.

Outlook

This growth will be driven by product launches, expansion of distribution channels, and focus on gaining more OEM tie-ups. Maintain Buy, with a TP of ` 1,017 based on 20x FY21E earnings.

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