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Bridging The Gulf

Promoter Sanjay Hinduja ups his holding in Gulf Oil Lubricants

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Published 4 years ago on May 06, 2016 Read

Fuelled by discounts, Gulf Oil Lubricants has been chipping away at leader Castrol India’s market share. Over the last six months, Castrol India’s shares have dipped 18.5%, while Gulf Oil’s have gained 9%. The latter’s stock price also touched an all-time high of Rs.586 on April 18. On the same day, chairman Sanjay Hinduja’s holding company Gulf Oil International (Mauritius) bought 4.9 lakh shares for a consideration of Rs.27.61 crore. If the promoter’s market activity is anything to go by, this might just be the beginning of good days for the company. And analysts agree: they reckon Gulf Oil Lubricants is undervalued (24x FY17E) despite low leverage, superior return ratios (FY18E RoE at 40.5%), multi-year market share gains, healthy dividend payout (35%) and growth prospects. Gulf Oil also reported a 12% y-o-y jump in volumes in Q3FY16, with the top line rising 9% to Rs.259 crore and net profit improving 43% to Rs.26 crore. The company is now aiming to grow its volumes 2-3 times the industry growth rate, besides increasing capacity to 170,000 kilolitre from 90,000 kilolitre. It is also mulling tie-ups with OEMs and industrial consumers to boost volumes.

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