Gulf Oil Lubricants India Ltd Share Price – NSE  / BSE

Chemicals, Small Cap

The agency has affirmed the company’s short-term rating at ‘[ICRA] A1+’.

ICRA stated that the rating upgrade factors in the expectation of healthy improvement in the credit profile of the company over the next couple of years as the demand for its products is expected to remain healthy supported by increasing vehicle sales, wide distribution network and a strong brand recall for the company’s products.

The ratings continue to factor in the company’s strong financial profile, characterised by healthy profitability levels and return indicators and a comfortable capital structure.

In FY2024, the company witnessed healthy revenue growth driven by a mix of growth in the sales volume and realisations. The operating profit also increased in FY2024 driven by the growth in volumes and company passing on the increase in the raw material prices to consumers.

The trend has continued in H1 FY2025 with company witnessing healthy volume growth and associated growth in operating profits.

The ratings continue to consider the company’s ability to maintain healthy profitability levels on the back of timely price revisions to partly mitigate the impact of base oil price movements.

The company has also been witnessing improvement in its market share in the domestic lubricants industry, driven by its strong marketing efforts, the well-recognised Gulf brand and a wide distribution network.

The company also benefits from being part of the Hinduja group as it derives operational and strategic benefits from being part of the group.

The ratings are, however, constrained by the exposure of the company’s profitability to the movements in base oil prices. Its profitability is also exposed to forex movements (to the extent of the unhedged exposure).

The company’s operations will continue to be exposed to the demand indicators from the automotive sector.

The ratings also consider the highly competitive pressures in the domestic market, which is largely dominated by Government-owned oil marketing companies (OMCs), apart from other established players in the private sector.

Gulf Oil Lubricants India (GOLIL) is part of the transnational conglomerate Hinduja Group. GOLIL sells its lubricants products under the Gulf brand with sales largely to the automotive sector along with industrial users.

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Gulf Oil Lubricants India has received upgrade in credit ratings from ICRA as under:

Long term fund based cash credit (Rs 92 crore) - ICRA AA+; Stable (upgraded from ICRA AA; Stable)

Short term – fund based/non fund based-others (Rs 50 crore) - ICRA A1+ (reaffirmed)

Short term non fund based- others (Rs 490 crore) - ICRA A1+ (reaffirmed)

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Profit before tax (PBT) climbed 14.52% to Rs 113.39 crore in second quarter of FY25, compared with Rs 99.01 crore posted in same quarter previous fiscal.

EBITDA stood at Rs 107.15 crore during the quarter, registering the growth of 6.64% on YoY basis.

EBITDA margin stood at 12.62% during September 2024 quarter as against 12.52% in Q2 FY24, which is within the guided range of 12-14% even as the company increased investments significantly during the quarter in brand campaigns.

Ravi Chawla, MD & CEO, Gulf Oil Lubricants India, said, “Despite the operational impact of heavy rains in the beginning of Q2, overall demand for us remained healthy, driving-up our Q2 lubricant volume growth by 9%. This reinforces our unwavering commitment and reliable performance, even amid challenging conditions, positioning us well for continued 2-3x market growth.

Further, we uphold a positive demand outlook, confident in the medium- to long-term potential of India's lubricants sector. Our growth momentum is sustained through strategic & impactful brand investments, enhanced product capabilities and industry leading initiatives driving-up profitable growth across our focus segments.”

Manish Gangwal, CFO, Gulf Oil Lubricants India, said, “We had a good quarter in spite of the volatile market conditions with Q2 and H1 PAT growth at healthy 15% and 22% respectively on year-on-year basis. We focused on sustaining our margins, achieving an improvement in gross margin, resulting in an EBITDA of 12.62% of revenue, while investing in brand, digital and human resources to enhance long term endurance of the organization. Our robust cash flow generation in H1 reflects our continued focus on working capital management and operational efficiencies.”

Gulf Oil Lubricants India, part of Hinduja Group and Gulf Oil International, is one of the leading players in the lubricant market in India and has a top 2/3 position in key segments amongst the private sector brands. The company has a wide range of world class-leading products in the automotive and industrial lubricants space catering to B2B and B2C segments with a growing distribution network. The company also has a growing share in the 2-wheeler batteries segment.

Shares of Gulf Oil Lubricants India declined 3.48% to Rs 1,219 on the BSE.

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Net profit of Gulf Oil Lubricants India rose 13.74% to Rs 83.71 crore in the quarter ended September 2024 as against Rs 73.60 crore during the previous quarter ended September 2023. Sales rose 7.69% to Rs 863.98 crore in the quarter ended September 2024 as against Rs 802.30 crore during the previous quarter ended September 2023.

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