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 64 reflects moderate overall profile with strong momentum, strong value, weak quality. Based on 3 of 4 signals – score is capped at 90 until remaining data ingests.
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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