ICICI Securities Initiates Coverage on Gulf Oil Lubricants India, Sets Target Price of Rs 1488

ICICI Securities Maintains Buy Rating on Gulf Oil Lubricants India

Gulf Oil Lubricants India (GOLI) has reported a significant growth in its earnings before interest, taxes, depreciation, and amortization (EBITDA) for the fourth quarter of fiscal year 2026 (Q4FY26), at INR 1.35 billion, representing an 8.5% year-over-year (YoY) increase. However, its profit after tax (PAT) has decreased by 1.7% YoY to INR 0.9 billion, as estimated by ICICI Securities.

The company's product/segment mix and premiumization strategies have helped offset the increase in input prices, resulting in a 60 basis points (bps) YoY decrease in its EBITDA margin to 13%, which aligns with ICICI Securities' estimate of 12.9%. The mobility and B2B segments have witnessed double-digit growth, driven by stronger AdBlue volumes, reflecting an overall volume growth of 11.1% YoY.

In light of softer margins amid rising input costs, ICICI Securities has revised its earnings per share (EPS) estimates for fiscal year 2027 (FY27E) and FY28E by 4.4% and 0.9%, respectively. Despite this, the research firm remains positive on GOLI's prospects for the next two to three years, anticipating steady volume growth, stronger margins, and limited threat from electric vehicles (EVs).

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Maintain Buy Rating with a Revised Target Price

The valuation multiples of 9.5x FY28E price-to-earnings ratio (PER), 5.8x EV/EBITDA, and 2.4x price-to-book value (P/BV) on FY28E are considered attractive compared to peers, such as Castrol. ICICI Securities has revised its target price for GOLI to INR 1,488, based on FY28E multiples, implying a 60% upside from the current market price (CMP). The target multiples are at a steep discount to Castrol, as seen in Exhibit 21.

ICICI Securities maintains its buy rating on Gulf Oil Lubricants India, with a revised target price of INR 1,488.

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