Savita Oil Technologies targets volume and margin growth through premium product demand
Savita Oil Technologies Ltd.
BUY
₹775
₹688
₹950
22.58%
Investment View and Target Price
ICICI Securities, in its August 6, 2026 company update on Savita Oil Technologies Limited, maintains its BUY rating and revises its target price to Rs 950 from the current market price of Rs 775. The positive view is based on healthy demand in transformer oils and industrial lubricants, expected double-digit volume growth, improved realisations and a richer mix of better-margin premium products.
The target price is based on 18 times FY28E price-to-earnings.
Business Profile and Capacity
Savita Oil Technologies is a manufacturer of specialty petroleum products. Its two principal segments are Petroleum Specialty Oils, contributing about 73 per cent of sales, and Lubricating Oils, contributing about 26 per cent.
Petroleum Specialty Oils include transformer oils, white and mineral oils, and formulated specialty products. Lubricating Oils include automotive and industrial oils. The FY26 domestic and export revenue mix was 83 per cent and 17 per cent, respectively.
The company has total capacity of around 5.5 lakh tonnes across four facilities: one each at Mahad and Navi Mumbai, and two at Silvassa.
Q1 FY27 Financial Performance
Q1 FY27 operating income was Rs 1,479.8 crore, compared with Rs 589.1 crore in Q1 FY26 and Rs 1,224.0 crore in Q4 FY26. EBITDA was Rs 363.8 crore and the EBITDA margin expanded to 24.6 per cent, compared with 5.5 per cent in Q1 FY26 and 5.3 per cent in Q4 FY26. The report attributes the margin improvement to better sales realisation.
| Financial metric | Q1 FY27 | Q1 FY26 | Q4 FY26 |
|---|---|---|---|
| Operating income (Rs crore) | 1,479.8 | 589.1 | 1,224.0 |
| EBITDA (Rs crore) | 363.8 | Not stated | Not stated |
| EBITDA margin | 24.6% | 5.5% | 5.3% |
| PAT (Rs crore) | 288.1 | 53.1 | Not stated |
| PAT margin | 19% | 6% | Not stated |
During the quarter, export and Lubricating Oil volumes recorded double-digit year-on-year growth, although domestic white-oil volume declined.
Volume Growth and New Product Drivers
ICICI Securities expects overall volume to grow at about 13 per cent CAGR over FY26 to FY28E, compared with 7 per cent CAGR over FY23 to FY25. The broker expects demand and ramp-up of existing capacity to support this growth.
New products are expected to provide additional growth drivers. SAVSOL lubricant reportedly grew four times the industry growth in Q1. QuantiCool is benefiting from demand from data centres, battery energy storage system modules and electric-vehicle battery packs.
The report notes that the immersion-coolant market could grow to US$2 billion by 2031 from US$400 million currently, implying about 38 per cent CAGR.
Margin Expansion and Financial Outlook
The broker expects EBITDA per KL to grow at around 24 per cent CAGR, from Rs 4,555 per KL in FY26 to Rs 7,431 per KL in FY28E. This is expected to be supported by improved realisations and operating leverage.
Higher raw-material costs are expected to be largely offset by price increases across transformer oils and lubricants. ICICI Securities forecasts revenue CAGR of about 32 per cent and EBITDA and PAT CAGR of about 41 per cent each over FY26 to FY28E.
| Estimate (Rs crore) | FY27E | FY28E |
|---|---|---|
| Revenue | 6,272.7 | 7,584.3 |
| EBITDA | 393.1 | 484.7 |
| PAT | 292.5 | 362.5 |
Key Risks
- Slowdown in demand
- Raw-material-price volatility
- High competition
Disclaimer: This is a summary of a research report published by the broker/research house identified above. The views, recommendations, target prices and estimates are those of the respective broker and do not represent DSIJ investment advice. The summary may be AI-assisted, hence please refer to the original report for complete details, disclosures and risks.
