Gulf Oil Lubricants Buyback 2022

Gulf Oil Lubricants India Ltd (GOLIL), part of the Hinduja Group, is an established player in the Indian Lubricants Industry. Gulf Oil International (GOI), parent of GOLIL, owns the Gulf brand globally (except USA, Spain & Portugal). Previously a part of Gulf Oil Corporation Limited, today, GOLIL, as part of the parent company GOI, enjoys a presence in over a 100 countries.

The ‘Gulf Oil’ brand enjoys a position among the Top 3 lubricant brands with regards to brand awareness, purchase consideration and other parameters. The brand is known for its rich history and association with the world of sports, and they are proud to have the modern legend, Mahendra Singh Dhoni as their Brand Ambassador.

Gulf Oil Lubricants collaborated with Top OEM’s and B2B customers like Ashok Leyland, Mahindra, Swaraj Volvo Penta, MAN, Bharat Benz Whitmore, Schwing Stetter and Bajaj. These significant partnerships have helped it adapt and pioneer many go-to-market models in the automotive industry like co-brand oils, genuine oils and approved oils.

Buy Back Offer Deal:

Buyback Type: Tender Offer
Buyback Record Date: Feb 21 2022
Buyback Opening Date: Mar 25 2022
Buyback Closing Date: Apr 07 2022
Buyback Offer Amount: ₹ 85.2 cr
Date of Board Meeting approving the proposal: Feb 09 2022
Date of Public Announcement: Feb 09 2022
Buyback Offer Size: 85%
Buyback Number of Shares: 14,16,667
Price Type: Tender Offer
FV: 2
Buyback Price: ₹ 600 Per Equity Share

Details of Buyback:

Board of Directors of Gulf Oil Lubricants India Limited (“Company”) at their meeting held today viz. Wednesday, February 09, 2022 have approved the proposal to buyback upto 14,16,667 (Fourteen Lacs Sixteen Thousand Six Hundred Sixty Seven) fully paid up equity shares of the face value of Rs. 2/- (Rupees Two Only) each (“Equity Shares” or “Shares”) at a price of Rs. 600/- (Rupees Six Hundred Only) per fully paid up Equity Share payable in cash (“Buyback Price”) for a maximum amount not exceeding Rs. 85,00,00,200/- (Rupees Eighty Five Crores Two Hundred Only) (“Buyback Size”), representing 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 and is within the 10% limit of paid-up share capital and free reserves (including securities premium account) of the aggregate of the fully paid-up equity share capital and free reserves under the board of directors approval route as per the provisions of the Companies Act, 2013 from the equity shareholders of the Company, as on the record date i.e. Monday, February 21, 2022 (“Record Date”) on a proportionate basis, through the Tender Offer route.

Salient financial parameters:

Particulars (Cr) Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21
Sales 967 1,011 1,087 1,332 1,706 1,644 1,652
Expenses 838 852 909 1,097 1,423 1,357 1,387
Operating Profit 129 159 178 236 283 287 265
OPM % 13% 16% 16% 18% 17% 17% 16%
Other Income 9 18 20 26 29 35 52
Interest 18 18 10 9 15 25 15
Depreciation 5 6 7 10 22 33 34
Profit before tax 116 153 181 243 275 265 269
Tax % 33% 35% 35% 35% 35% 23% 26%
Net Profit 77 100 118 159 178 203 200
EPS in Rs 15.62 20.24 23.69 31.90 35.70 40.42 39.77
Dividend Payout % 35% 35% 36% 33% 32% 35% 40%

How to Participate in buyback?

1. Firstly to be eligible for the buyback the investor should have shares of Gulf Oil Lubricants Buyback 2022 in demat or physical form as on record date [21.02.2022]. 2. Once you have shares in demat, you can participate in the buyback process which is opening from [ 25.03.2022 to 7.04.022 ]by selling your shares through your broker on NSE or BSE. 3. Then on [ 20.04.2022 ] the payment will be given to you for accepted shares and unaccepted shares will be returned to your demat account.

Profit from the buyback on the bases of acceptance Ratio:

Buy 333 Shares at CMP of Rs. 494 (2,00,000/600=333)
Acceptance Ratio 33% 50% 75% 100%
Amount Invested in Buyback 1,64,502 1,64,502 1,64,502 1,64,502
No. of Shares buyback 109 166 249 333
BuyBack Profit 11,554 17,596 26,394 35,298
Profit 7% 10% 16% 21.4%
 

Recommendation:

Review and Recommendation of Gulf Oil Lubricants Buyback from our IZ team is:4/10 1-5: Fair 5-7: Good 7-10: Excellent.

17 Comments

          Any information regarding the Acceptance Ratio in general category, if shared, will be appreciated. Thank you.

          Reply

    Dear SRK ji
    Important point: Promoters having 71% equity would apply for only 11 L Shares i.e. 2.18% shares only. So condition similar to Nucleus, where small share holder may have small acceptance of 10-25% and other than small share holders would have 20-40%.
    Still, I feel like missing bus, as rate have appreciated from 485 to 512 and considering current market it may be possible that ultimately the return shares give more loss than gain in Buyback…
    I may buy more than 2L but at less than 500 only///
    Lets see, if it would be with me till 17th Feb, last day to buy for buyback

    Reply

      Sumit ji,
      I am really indebted n grateful to you for your valuable guidance from time to time. I am learning a lot from your experience n expertise. Thank you once again for your kindhearted response to help me to learn more.

      Reply

        Hello Sumit.
        Please check my analysis:

        Retail quota Total Retail share capital (less than 2 Lac holding) Min ER =Retail quota/total retail shareholders (if all participate)
        212.500 5.532.461 4%

        Non Retail shares (total buyback-retail quota) Total Non Retail share capital ER – Non Retail (if all participate)
        1.204.167 9.774.588 12%

        It is not same as Nucleus. for Nucleus it was 44% and not 12%

        Arbitrage is 15%

        Reply

          Sir with what I understand from your analysis is that The Acceptance Rate under Retail is going to be very low. Do you feel we can expect 20-25% from General ? ’cause lower than that the margin of safety isn’t there at 515 CMP. Please advise.

          Reply

        Sir,
        Total 360 shares purchased. May be missing by 25 shares, as the order is not completely executed, to be considered under the General Category AR in General Category is likely to be more than that of the Retail Category as you mentioned. Thank you for your kind guidance.

        Reply

          Full stop missed between “ General Category “ n “AR”. Extremely sorry for the inconvenience caused.

          Reply

      And i can also compare to Mayur. Promoters stocks who are willing to participate is 1.254.869

      Similar analysis gave me ER of 1% for retail, and around 10% for general (of all are willing to participate). I practice it will be more.

      And current arbitrage is 35%

      So from General category POV, should we not go for Mayur, instead of Gulf?

      Reply

      Mr.Jain with what I understand from your analysis is that The Acceptance Rate under Retail is going to be very low. You’ve stated that AR in general could be between 20%-40%. Do you feel this is good enough margin of safety @515 CMP. Please advise.

      Reply

      Your analysis looks OK except for likely acceptance in Reserved share holder category. I feel even the Entitlement ratio may be more than 30%.

      Reply

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