Multibagger stock: After 150% rally in 1 yr, analysts see more 14% upside for Gulf Oil Lubricants shares;Should you buy?

Gulf Oil Lubricants share price has surged by more than 6% to reach an all-time high of ₹1,510 per share on the BSE. This comes after Systematix Institutional Equities, a brokerage house, initiated coverage with a buy rating and established a target price of ₹1,700, indicating a potential upside of 14%. The brokerage emphasized that Gulf Oil Lubricants India is at a turning point in its development where it can take use of its strong brand recall, cutting-edge product line, and deliberate diversification to propel new-age enterprises for long-term and above-industry earnings growth.

Gulf Oil Lubricants share price today opened at an intraday low of ₹1,419.85 apiece on the BSE. According to trendlynde data, the stock experienced a 154.06% increase and surpassed its sector by 91.24% over the last year.

“Gulf Oil Lubricants share price has recently formed a Higher Top, Higher Bottom structure and is thus in an uptrend. The 20 DEMA at ₹1,350 is a good support for the near term. Traders can keep a buy-on-dip approach for this stock,” said Ruchit Jain, Lead Research Analyst at 5paisa.

Market share in lubricants to grow consistently

According to the brokerage's analysis, the firm anticipates growing at a rate more than twice as fast as the core lubricant sector over the next several years, perhaps increasing its existing market share of 7-8%. Over the coming years, core lubricant volume growth is predicted to be around 7%, compared to the industry's projected increase of 3%. In the previous three years, the business has increased its AdBlue market share by 25%, with volumes reaching 128 million liters in FY24.

“We forecast 14% CAGR in AdBlue volumes during FY24-FY27E to reach 190mn ltrs, backed by healthy growth in commercial vehicle sales volumes,” said Systematix Institutional Equities in its report.

Entry into EVs and DC cooling liquids augur well for long-term growth prospects

The brokerage research states that Gulf Oil Lubricants is intentionally targeting high-growth areas including data center (DC) cooling liquids in order to position itself for long-term success.

To enter the EV charging market, Gulf Oil Lubricants purchased a 7.5% share in Indra Renewable Technologies. They now hold a 7%–8% market share in the UK for home EV chargers. The firm wants to introduce cutting-edge and environmentally friendly charging options to India by taking use of Indra's dominant market dominance in the home EV charger segment and its strong presence in the UK. Furthermore, Gulf Oil Lubricants leads the industry in DC rapid charging because to its 51% ownership of Tirex.

Valuations

“We view Gulf Oil Lubricants as a strong investment case because of its solid core volume growth, strategic focus on premiumisation and consistent 13-14% EBITDA margin and healthy return ratios. We have valued Gulf Oil Lubricants at a PER of 18x FY27E, +1standard deviation of 5- year mean multiple, as we believe concerns surrounding EVs taking over ICE vehicles is a distant possibility,” the brokerage said.

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision.