ICICI Direct initiates BUY on Savita Oil Technologies with Rs 690 target. Volume growth of ~14% CAGR and margin recovery from Rs 4,555/KL drive the call. New immersion coolants target a $2 bn data-centre market by 2031.
Alpha Score of 65 reflects moderate overall profile with strong momentum, strong value, weak quality, moderate sentiment.
ICICI Direct has initiated coverage on Savita Oil Technologies with a BUY rating and a target price of Rs 690, valuing the stock at 14x estimated FY28 earnings. The call rests on a double-digit volume growth outlook and a projected recovery in per-unit margins.
Savita makes specialty petroleum products across two segments: Petroleum Specialty Oils (roughly 73% of sales) and Lubricating Oils (about 26%). The specialty portfolio includes transformer oils, white and mineral oils, and formulated products. Lubricants cover automotive and industrial oils. Domestic sales account for 83% of FY26 revenue; exports make up the rest.
The company operates four units – one each at Mahad and Navi Mumbai, and two at Silvassa – with total capacity of about 550,000 tonnes. Total sales volume grew 17% year-on-year in FY26, with double-digit growth across all segments. ICICI Direct expects that pace to continue, estimating a volume CAGR of roughly 14% over FY26-28, up from 7% over FY23-25. A capacity expansion for synthetic ester-based products at Mahad, done in two phases, should add volume as it ramps up.
New products are also in the pipeline. Savita relaunched SAVSOL, a lubricant with a new ester molecule, and the company says it grew five times the industry rate in FY26. Two immersion coolants – QuantiCool-EG50 for battery energy storage and EV battery packs, and QuantiCool-PG25 for AI and data-centre cooling – target a market ICICI Direct estimates will grow from $400 million today to $2 billion by 2031, a roughly 38% CAGR.
Margins are the other leg of the thesis. EBITDA per kilolitre fell from FY22 through FY25, then recovered 23% year-on-year in FY26 to Rs 4,555. The brokerage expects EBITDA/KL to improve at a roughly 20% CAGR through FY28, driven by higher blended realisation – raw material cost increases are expected to be passed through via price hikes in transformer oil and lubricants – and positive operating leverage from volume growth.
Revenue is projected to grow at about 34% CAGR over FY26-28, with EBITDA and PAT growing at roughly 36% and 37% respectively. The target price of Rs 690 implies about 14x FY28 estimated earnings.
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