The stock of Gulf Oil Lubricants on Tuesday hit a new 52-week low of Rs 495 and closed at Rs 499. The stock has hit a 52-week high of Rs 827, so, the share fall has been pretty steep. Let's look at certain fundamentals and then tell you whether the stock is cheap at the current levels and should you buy?
Financial performance for the quarter ending Sept 2021
During the Quarter ended September 30, 2021, Gulf Oil has achieved revenues of Rs 533.52 crores and net profits of Rs 58.70 crores. This was against a net revenue of Rs 411.74 crores and net profits of Rs. 59.12 crores respectively for the quarter ended September 30, 2020.
"Post the ebbing of the second wave towards the start of Q2, business returned back to near normal levels. This helped the company improve B2C sales from subdued Q1 levels and we continued our strong volumes in B2B segment reaching an overall double digit volume growth over last year Q2. However, rising input costs and consequent margin management remained a key focus area and the Company has taken a series of pricing actions, which has progressively enabled the Company to regain its margin per unit of volume sold to a large extent," the company said.
Gulf oil is ready for the future with launch of e-lubricants
There is an increasing demand for electric vehicles and this is growing. Gulf Oil has launched a range of eFluids including Gulf eLEC range of Coolant, Brake fluid, Driveline fluid, Gulf Hybrid Automatic Transmission Fluid, Dual Clutch Transmission Fluid and Gulf Formula 0W-20 fully synthetic engine oil for Hybrid & Fully Electric vehicles.
Gulf Oil recently inaugurated a new Adblue section in its Chennai plant & another section for manufacturing Metal Working Fluids in Silvassa plant.
The Company entered into a tie-up and collaborated with the Construction and Mining business division of L&T to launch a range of genuine oils for their equipments and customers.
Fundamentals warrant a buy on the stock of Gulf Oil Lubricants
The company is one of the fastest growing lubricant manufacturers in the country. The company has a low equity of just slightly over Rs 10 crores. The debt to equity is also negligible at 0.23. The promoters holding in the company is slightly more than 71%.
Now, if you look at the EPS for the quarter ending Sept 30, 2021, the same was Rs 11.66. We expect the annualized EPS in the FY 2022-23 to be around the Rs 50 mark as normal business activity for the company resumes. If we even assume a p/e multiple of 15 times, the stock should be quoting at Rs 750 or at least near its 52-week highs of Rs 827.
The dividend yield on the stock is more than 3%, which is also good. All of the above factors make the stock of Gulf Oil Lubricants stock a good stock to buy at the current levels.
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