Stock To Buy: Company Announces Buyback, Available At A P/E Of 10, Strong Brand

Gulf Oil Lubricants is one of the top lubricants player in the automotive and industrial segment. The company has put-up a strong show for the quarter ending Dec 31, 2021. Here are some of the reasons to but the stock of Gulf Oil Lubricants.

Buyback of shares at much higher price to current market price

The company has announced a buyback at a price of Rs 600, as against the current market price of Rs 490. The company will be buying back Fourteen Lacs Sixteen Thousand Six Hundred Sixty Seven) fully paid up equity shares of the face value of Rs. 2, for a maximum amount not exceeding Rs. 85,00,00,200/- (Rupees Eighty Five Crores Two Hundred Only).

The Buyback Size, represents 9.8% of the paid-up equity share capital and free reserves as per audited financial statements of the Company for the financial year ended March 31, 2021. The record date for the purpose of buy back entitlement is Feb 21.

Strong quarterly numbers

Gulf Oil reported a good set of quarterly numbers with Q3 Revenues surging 25% to Rs. 601.82 crores year-on-year.

During the first nine months period ended December 31, 2021, Gulf Oil achieved net revenue of Rs 1,553 crores and net profits of Rs. 148 crores as against net revenue of Rs. 1,135 crores and net profits of Rs.140 crores respectively for the Nine Months ended December 31, 2020. the company has reported a strong double-digit growth registered in Industrial segment on YOY basis.

It has also won contract for supply of newly launched Synthetic Series Gear oils of factory fill supplies to one of the biggest global gear box manufacturers. We believe that as the economy opens-up the outlook for the company will continue to be brighter.

Valuations and reasons to buy the stock

Gulf Oil Lubricants has been reporting an EPS of almost Rs 12 in covid induced quarters. We believe should the economy open-up completely, the company is capable of doing an EPS of at least Rs 55 in 2022-23. This leaves the valuations at around the 9 mark in terms of price to earnings multiples considering the current market price of Rs 490.

Remember the stock also comes with a good dividend yield of around that 4% mark and also has a buy back. So, if you buy the stock you would also be entitled to participating in the buyback of shares.

In short, the buyback of shares, strong financial performance, low valuations and good dividend yields are some of the reasons to buy the stock of Gulf Oil Lubricants.

The stock of Gulf Oil last closed at Rs 490.80 on the NSE.

Buy in small quantities

Are recommendation to investors is to buy in small quantities as markets in general are overpriced. With interest rates across the globe surging and the US Federal Reserve tightening, we believe that stocks are likely to be volatile.

Disclaimer

Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies and the author are not liable for any losses caused as a result of decisions based on the article.