Summary
Gandhar Oil Refinery (India) Ltd - Q3 FY 2025-26 Earnings Call Summary Wednesday, January 28, 2026, 11:00 AM IST
Event Participants
Executives 2 Aslesh Parekh (Joint Managing Director), Indrajit Bhattacharyya (CFO)
Analysts 7 Bhavesh Patel, Pratik Shah, Rahil S., Rajesh Agarwal, Ritesh Poladia, Rohit, Vivek Gupta
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue from Operations | ₹1,167 crores | +16% YoY and +10% QoQ; driven by strong international sales and steady volume growth. |
| EBITDA | ₹59 crores | Significant YoY growth; however, moderated sequentially from Q2 FY26. |
| Profit After Tax (PAT) | ₹34 crores | +70% YoY from ₹20 crores in Q3 FY25; reflects operational resilience despite volatility. |
| Manufacturing Gross Margin | ₹7,271 per kL | 12-quarter low; impacted by raw material price fluctuations and sluggish FMCG demand. |
| PHPO Revenue Contribution | 50.0% | Core segment (Personal Care, Health Care, Performance Oils) remains the primary revenue driver. |
| Lubricants Revenue Contribution | 26.8% | Steady growth; management notes automotive demand faces long-term EV shifts. |
| PIO Revenue Contribution | 9.5% | Process and Insulating Oils (including Transformer Oil) contribution. |
| Cash Conversion Cycle | ~65-70 days | Receivables at 65-70 days; management maintains lean inventory of 40-45 days. |
Geographic & Segment Commentary
- International Operations: Overseas sales contributed 45% of consolidated revenue for 9M FY26. The Sharjah plant is currently operating at 70-72% utilization, with plans to reach 90-95% over the next two years as customer accreditations conclude.
- PHPO (Personal Care & Health Care): This segment remains the most “sticky” with long-term customer relationships (7-8 year entry cycles). While domestic FMCG demand has been muted, management anticipates a turnaround following GST reforms and improved rural liquidity.
- Transformer Oils/Lubricants: Transformer oil is viewed as a growth segment due to electrification, though it is capital-intensive with longer payment cycles. Industrial lubricants are expected to rise with economic expansion, offsetting potential long-term declines in automotive lubricants.
Company-Specific & Strategic Commentary
- Capacity Expansion: Management approved the purchase of land adjacent to both Silvassa and Taloja facilities for future expansion. New capex plans and capacity details are expected to be finalized by the end of the current fiscal year.
- Pricing Strategy: Approximately 35% of the business operates on a price pass-through mechanism. For spot customers, pricing is adjusted every 15 days to mitigate base oil volatility.
- Asset Stickiness: Around 70-75% of revenue is derived from repeat customers. Management is currently developing specialized R&D-led formulations for MNC clients, which currently account for 7-8% of PHPO revenue.
- Logistics & Freight: To manage geopolitical volatility, the company has shifted a majority of shipments to FOB (Free on Board) terms, where customers arrange freight, reducing the company’s exposure to shipping rate spikes.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Volume Growth | 10-15% CAGR | Targeted growth over the next 2-3 years through existing capacity and Sharjah ramp-up. |
| EBITDA Margin | 5.0% - 5.5% | Management expects margins to stay in this range or improve as FMCG demand recovers. |
| Gross Margin Spread | ₹7,800 - ₹8,000 per kL | Target range for normalized operations, up from the current ₹7,271 per kL. |
| Sharjah Utilization | 90% - 95% | Expected within the next 2 years as raw material lines and customer onboarding finalize. |
Risks & Constraints
| Risk | Context |
|---|---|
| Raw Material Volatility | Base oil is a crude derivative; while pass-throughs exist for 35% of business, rapid spikes can impact the remaining spot business. |
| Working Capital | Transformer oil and certain domestic segments have higher debtor days; the current cycle is ~70 days. |
| FMCG Sector Slump | Domestic PHPO growth is heavily reliant on a recovery in rural consumption and FMCG volume growth. |
| Geopolitical/Freight | Though shifted partly to FOB, international sales (45% of revenue) remain sensitive to global shipping disruptions. |
Q&A Highlights
Margin Compression
- Question: Why has the per-kiloliter gross margin hit a 12-quarter low despite record revenue? (Bhavesh Patel)
- Answer: It is a combination of raw material costs and the inability to push higher prices to FMCG/Pharma customers due to sluggish demand. Management expects this to normalize toward ₹7,800-₹8,000 per kL (Indrajit Bhattacharyya).
Capacity & Sharjah Ramp-up
- Question: What is the peak revenue roadmap for the current 6 lakh kL capacity? (Rohit)
- Answer: Current utilization is high in India, but Sharjah still has 30% headroom (approx. 60,000 kL). Reaching 100% capacity globally could add significant volume over the next 2 years (Indrajit Bhattacharyya).
Export Strategy
- Question: Which regions are driving the 45% export share? (Pratik Shah)
- Answer: Growth is currently led by Asia Pacific and Africa. Management is also monitoring potential U.S. and EU trade deal benefits that could shift the landscape (Aslesh Parekh).
Strategic Land Purchase
- Question: What is the purpose of the recently announced land purchases in Taloja and Silvassa? (Bhavesh Patel)
- Answer: These are adjacent plots intended for physical expansion beyond the current 6 lakh kL capacity. Specific capex numbers will be shared in coming quarters (Aslesh Parekh).
Key Takeaway
Gandhar Oil Refinery reported record consolidated revenue of ₹1,167 crores in Q3 FY26, a 16% YoY increase, supported by a strong 45% contribution from international markets. While PAT grew 70% YoY to ₹34 crores, manufacturing spreads compressed to ₹7,271 per kL due to a sluggish FMCG environment and raw material volatility. Strategically, the company is ramping up its Sharjah facility (currently at 72% utilization) and has secured land for future expansions at Taloja and Silvassa. Management maintains a disciplined 40-45 day inventory cycle and is transitioning more international business to FOB terms to mitigate freight risks. Looking forward, the company targets 10-15% volume growth and a recovery in gross margins to the ₹8,000 per kL range as domestic consumption improves. Performance remains tied to the successful ramp-up of the Sharjah plant and the recovery of the global specialty chemical cycle.
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