Sharing ideas for profit from Moneycontrol Pro, Nitin Sharma of Moneycontrol.com spoke about Gulf Oil Lubricants, the stock that he is tracking closely. Investors with a long-term view can accumulate the Hinduja Group company's share at current levels.
Gulf Oil India is the second-largest private player in the $3 billion lubricants market and has a 7 percent market share. Its sales volume grew at a CAGR of 15 percent between 2015 and 2019 and saw a decline due to slowdown in the automotive market from 2020 onwards.
The company has managed to maintain its EBITDA margin between 16 and 17 percent; while sales growth outperformed the industry broadly. Realisations remained broadly flat in line with the industry.
COVID lockdown affected the vehicle mobility and impacting Gulf Oils' business badly. However, in this financial year, the lubricants market witnessed a strong demand recovery. Recovery in vehicle sales should drive the volume offtake for the company.
The company has a strong focus on original equipment manufacturers (OEMs). It has a robust distribution network. Recent price hike should insulate it from the rise in base oil cost.
Moneycontrol Pro expects realisations to improve and growth in sales volume at least by 5 percent for the next two to three years.
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