Tide Water has been a pioneer of Automotive and Industrial lubricants in India since 1928 and has five plants at Howrah, Oragadam, Turbhe, Silvassa and Faridabad. Its repertoire of automotive products includes engine oils for trucks, tractors, commercial vehicles, passenger cars and two/three wheelers. It also produces gear oils, transmission oils, coolants and greases for automobiles. For industrial application it manufactures industrial oils, greases and speciality products like metal working fluids, quenching oils and heat transfer oils.
Tide Water has tie-ups for manufacture of genuine oils with a number of renowned OEMs in the automotive and industrial equipment segment. The company also has technical collaboration with Nippon Oil Corporation, the No.1 petroleum conglomerate in Japan. Company sells oil in automotive segment under the brand name Veedol, enjoys high brand recall. Superior quality lubricants under the brand name Eneos are also manufactured and marketed in India by Tide Water Oil Company.
Share holding of Tide Water Oil as per last quarter, Promoter holds 26.33% stake, institutions hold 14.31% stake, non promoter corporate bodies hold 40.93% stake and public hold only 18.43% (Only 160593 shares with 7269 share holders) stake in this company.
Last year quarter performance was above analyst expectations, June was outperforming quarter in which company has shown marvelous number, Net sales zoomed to Rs 197.65 crore from Rs 165.07 crore while net profit zoomed to Rs 15.78 crore from Rs 7.85 crore. Company has shown EPS of Rs 181.09 in June quarter itself. Company has paid 300% dividend to share holders for last year. Current level at per estimated EPS stock is trading at PE ratio of 10.
Looking at peer group, Castrol India is trading at a price of 625 with PE of 22 with a market cap of 7700 crore. Tide Water Oil stock is available at an attractive price of 5050 looking at medium to long term investment, market cap is only 440 crore with less public holding.
Company has equity of just 0.87 crore while company has huge reserve of around Rs 150 crore (More than 172 times of equity, it shows company is very strong bonus candidate).
We recommend Buy on Tide Water Oil with a target of 7200. Stock has strong support zone at Rs 4350, hence incase of severe market correction, Tide Water Oil may not go below 4350 levels and give an opportunity to accumulate more at lower levels. In the days to come, we also expect disinvestment story coming out in this company. Tide Water Oil can give 20 to 30 percent returns in next couple of months.