Gulf Oil's RoE to be 30-35%: PBT to touch Rs 140cr in FY15

Written By Unknown on Kamis, 31 Juli 2014 | 23.25

The Hinduja Group-owned Gulf Oil Corporation  on Thursday demerged its lubricants business to Gulf Oil Lubricants India Ltd and listed the latter as a separate entity on both domestic stock exchanges under the 'Gulf Oil' brand.

Sanjay Hinduja, Chairman of Gulf Oil Lubricants India is confident of the company's profit before tax (PBT) to grow significantly and touch Rs 140 crore in the coming fiscal itself.

In addition, EBIDTA margin is anticipated to improve substantially coupled with a double-digit topline growth, he says in an interview with CNBC-TV18 adding that Gulf Oil's return on equity (RoE) will advance to 30-35 percent.

Below is the edited transcript of the interview:

Q: Can you take us through the financials of the company in terms of projection for the current financial year and next financial year?

A: In terms of PBT, last year we closed around Rs 103 crore and this year expectation is to do significantly better than that and it terms of EBITDA Margins we are around 12 percent. I am expecting double-digit topline growth, both this year and going forward '15-16. We are in a growth pattern at the moment and all investments have been made for capturing this double digit growth.

Q: Can you focus a bit on your profits and what are the projections at least that you are working with in the foreseeable future?

A: Profit after tax (PAT) level we would be around Rs 70 crore plus and again the plan is to deliver significant value to the shareholders so PAT also will continue to grow northwards as we deliver double digit revenue growth.

Q: In that case, can you tell us if you would see some improvement in your return on assets and return on equity going forward?

A: Definitely, yes and this is one of the reasons we went ahead with this whole demerger process and we have been looking at this for the last one year and we can achieve those numbers. Of course on the other side, as you know on the real estate side also work has commenced on the Bangalore project. So I am expecting also on the Gulf Oil Corporation Limited side with the land projects now beginning to deliver revenue, I am sure both stocks will perform very well.

Q: Market share for lubricant side is around 5 percent. Where will the growth come from and what is the expected market share as well?

A: We are going to focus more on B2B tractor. We are going to be announcing in the next two weeks and other major OE tie-up. So, in terms of volumes, as I have mentioned before, the goal is to be the top three amongst the private sector players.

Q: Going back to number projection, for full year '15 can we expect a profit of Rs 100 crore or so?

A: On the PBT side right now, we are definitely looking at FY15 in excess of Rs 140 crore. So we are there near about I would say.

Q: And capex?

A: Yes we have acquired land in Chennai and we are going ahead with a second plant in Chennai, and I am expecting that will cost around Rs 120-130 crore and debottlenecking is happening in the existing plant in Silvassa which is Rs 30-40 crore.

Q: What about the promoter stake, are promoters looking to increase stake in the company going forward?

A: The promoter group GOI already has 60 percent, so we are well over 50 percent minimum. Therefore, we have no such plans for the moment.

Gulf Oil Corp stock price

On July 28, 2014, Gulf Oil Corporation closed at Rs 158.80, down Rs 4.2, or 2.58 percent. The 52-week high of the share was Rs 197.00 and the 52-week low was Rs 62.10.


The company's trailing 12-month (TTM) EPS was at Rs 11.77 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 13.49. The latest book value of the company is Rs 232.56 per share. At current value, the price-to-book value of the company is 0.68.


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