Gulf Oil Lubricants- Weak Q2, But Softer Input Prices, Growing Premiumisation Drive Optimism: ICICI Securities

ICICI Securities Report

Gulf Oil Lubricants Ltd. delivered a stellar performance in the preceding five–six quarters – consistent YoY revenue/Ebitda/PAT growth driven by industry leading volume growth in lubricants and sharply higher growth for the Adblue segment.

However, the momentum in volumes may ease for Q2, owing to a slowing in the commercial vehicle space for Gulf Oil Lubricants, impacting the factory fill segment (~8- 10% of overall business in FY24).

Resultant, sequential growth may wane for Q2, even as YoY growth remains in mid-teens. Nonetheless, our optimism on future growth is strong with lower oil (and hence LOBS) prices, continued premiumisation of product portfolio (driving margins higher) and potential of the EV charger business to become an Rs 7 billion revenue segment in the next few years.

We raise our FY26E/FY27E earnings per share by 1.9%/3.3%, baking in higher margins, target price to Rs 1,650. Retain Buy.

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