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Slight volume miss and higher opex but steady results overall
* Gulf Oil Lubricants India (GOLI) reported EBITDA/PAT of Rs742mn/476mn in Q4FY19, up 18%/15% yoy, up 2%/down 4% qoq, and 6%/2% below our estimate, partly due to higher-than-expected opex. Interest cost came in lower at Rs26mn vs. Rs50mn estimate.
* GOLI recorded 10% volume growth yoy to 30.2mn ltr (down 8% qoq), 2% below estimate but under challenging conditions (2% industry growth). Personal mobility (PM), infra and industrial reported double-digit growth rates, while DEO’s growth was in mid-single digits.
* Gross margin came in at Rs66.5/ltr, up 9% qoq and beat by 4% on 3% qoq growth in net realization to Rs144.7/ltr. EBITDA/ltr rose 11% qoq to Rs24.6 but came in below our Rs25.6 estimate due to higher unit opex of Rs41.8/ltr, up 6% yoy/8% qoq
* We maintain our estimates and TP of Rs1,150. Our FY20/21E volume CAGR of 14% is within the company’s 12-18% guided range, while margins are expected to recover further from an improvement in mix and proactive price hikes. Reiterate Buy.
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