Buy This Small Cap Oil & Gas Sector Stock For 45% Returns, Says Emkay Global

Emkay Global has placed a "Buy" on Gulf Oil Lubricants India Ltd. (GOLI) in its recent report on the company. The brokerage has assigned a target price of Rs 635/share to the stock, implying a potential upside of 45% from its current level. The stock operates in the Oil & Gas Sector engaged in the business of manufacturing, marketing and trading automotive and non-automotive lubricants. It is a small-cap stock having a market capitalisation of Rs 2,135.43 crore. Check below to know more:

Stock Outlook, Returns, & 52-Week Low/High

The current market price of GOLI stock on NSE is Rs 433.55/share. Its 52 week low is Rs 377.60/share and 52 week high is Rs 499.95/share, respectively. The stock has fallen 0.48% in the past 1 week. It has gained 5.13% in 1 month, and 0.62% in 3 months, respectively. However, the stock declined 6.14% in 1 year, 41.95% in 3 years, and 55.98% in 5 years, respectively.

 

Buy for a Target Price of Rs 625/share

According to the brokerage firm, Gulf Oil Lube's (GOLI's) Management reiterated that the Indian lube industry would maintain growth till the middle of next decade. Despite rising EV penetration, a large portion of new-vehicle sales would continue to be ICEs, leading to expansion of the lube universe; the lube market should clock 3-4% CAGR in the foreseeable future, with GOLI's own target maintained at 2-3x of the industry (i.e. >10%). The post-Covid cost pressures that have gripped the industry (first base oil and now having affected additives too) should subside going ahead, with oil stabilizing and the supply scenario easing. GOLI took responsive retail price-hikes to maintain unit margins, though percentage margins seem optically lower. AdBlue's annual market size is 500 millionlitres currently and is expected to see 3x growth in 5 years, entailing strong volumes for GOLI, which is a premium player with 15% market share. Company is also gradually increasing its EV footprint via investments and products. "GOLI's OCF would be deployed in core capex, EV foray and payout to shareholders (40% dividend payout, buyback, etc). We concur with Company outlook and reiterate BUY, with TP of Rs 625," the brokerage has said.

 

Disclaimer

The stock has been picked from the brokerage report of Emkay Global. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.