Interest rate hikes could lead to the possibility of a recession across some parts of the globe is what most analysts believe. It's hard to look into what happens in the future, but, stock markets have a mind of their own. Here are a few stocks that you could buy, which should not be impacted by recessionary type conditions.
Gulf Oil Lubricants
We like the stock of Gulf Oil Lubricants for a number of reasons. The first being the valuations of the company, which we believe are extremely cheap. However, to begin with to let you know, the company is a leading player in the lubricants space business, both automotive and industrial lubricants. Gulf Oil Lubricants had a good Q4 2021-22, wherein the company delivered the highest ever quarterly Volume, Revenues, EBITDA and profit before tax. It was interesting to note that despite talks of inflationary type conditions impacting corporates, Gulf Oil saw EBITDA Margins improving sequentially. Guld Oil Lubricants did take a number of initiatives in Q4, which helped boost revenues. It had a new OEM tie-up with International Tractors Limited (Sonalika) - for Factory fill, OEM Workshop & Distributor Channel as well as Co-branded sales in Retail. Gulf Oil also started Factory Fill Supplies to Hyundai Motors for some grades and received first-fill business from the green projects of ThyssenKrupp & Welspun Steel.
Why we recommend the stock of Gulf Oil Lubricants?
The company has constantly been focussing on creating shareholder value. Recently, the company concluded buy-back of equity shares at a price of Rs. 600/- per fully paid up Equity Share in cash. The buyback was done at a price that was significantly higher to the than prevailing market price of the stock. The company has now declared an equity dividend of Rs 5 per share, which is rather attractive. The company continues to invest in building its brand and driving CVPs (consumer value propositions) for its sub-brands in each segment. Apart from this, what also makes the stock attractive is the sharp fall in the price from levels of Rs 714 to the current levels of Rs 393. For the FY 2021-22 the company reported an EPS of Rs 41.89, which on a price of Rs 393, translates to 9.38 times. The cheap valuations and considering other parameters listed above, we believe the stock of Gulf Oil Lubricants should be a part of the portfolio and is a good buy at the current levels.
Pharma stocks are generally perceived to be safe haven stocks, during times of recession and slowdowns. Among the few reasons to recommend the stock of Aurobindo Pharma is the number of ANDA filings the company has and the possibility of a demerger of the injectables business. In fact, as per an ICICI Securities report, the US pipeline leaves the possibility to launch more than 20 products every year. The potential unlocking of injectable business, significant balance sheet improvement and investments in new segments for future growth (domestic formulation, biosimilars, vaccines, APIs etc.) are other positives for the company. The shares of the company have dipped from levels of Rs 1040 to Rs 534. The sharp fall in the share price has now made the price to earnings ratio attractive at around 21 times.
Recently, the Board approved the acquisition of 51% equity shares in GLS Pharma Limited, operating in oncology business and having manufacturing facility in Hyderabad. All in all, give the valuations the shares are good to buy for a longer term time frame.
Investing in stocks is risky and investors should understand the risk. Neither the author, nor Greynium Information Technologies Pvt Ltd would be liable for losses based on the above article. Markets have become volatile on account of rising interest rates and hence investors must be careful.