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Gandhar Oil Refinery (India) Limited — Q2 FY26 earnings call

Call held 14 Nov 2025

Management summary

Gandhar Oil Refinery reported strong Q2 FY26 results with consolidated revenue increasing 17.37% sequentially to INR 10,599 million and EBITDA growing 43.04% to INR 658 million. PAT also saw a significant sequential jump of 52.11% to INR 397 million. While international markets continue to face headwinds, the company is mitigating these through domestic presence and optimized sales mix, focusing on high-purity and sustainable product segments. Working capital days increased slightly due to higher inventory and receivables, but the company maintains a healthy current ratio and negligible debt-to-equity.

Highlights

Consolidated manufacturing volumes for H1 FY26 grew 9% YoY to 261,524 KL.
Q2 FY26 revenue increased 17.37% sequentially to INR 10,599 million.
Q2 FY26 EBITDA surged 43.04% sequentially to INR 658 million.
Q2 FY26 PAT more than doubled YoY, growing 115.76% to INR 397 million.
Manufacturing gross margin spread for Q2 FY26 stood at INR 8,662 per KL.

Concerns

International markets continue to face headwinds from global consumption softness, geopolitical issues, and logistical challenges.
Working capital days increased to 85 in Q2 FY26 from 77 in March '25, driven by higher inventory (58 days) and receivables (68 days).

Key financials

3 periods

Headline

Working Capital Days
85 days

Q2 FY26

Revenue
10,599 Mn
YoY +13.3% QoQ +17.4%
EBITDA
658 Mn
YoY +63.3% QoQ +43%
PAT
397 Mn
YoY +115.8% QoQ +52.1%
Manufacturing Gross Margin Spread
₹8,662/kl

H1

FY26 Manufacturing Volumes
2,61,524 KL
YoY +9%
FY26 Revenue
19,629 Mn
YoY +1.7%
FY26 EBITDA
1,118 Mn
YoY +11.2%
FY26 PAT
658 Mn
YoY +29.5%

What they filed

Q1 FY27: revenue up 91.8%, net profit up 692.3% against the same quarter last year.

₹ Cr · quarterly

Line item	Q2 FY25	Q3 FY25	Q4 FY25	Q1 FY26	Q2 FY26	Q3 FY26	Q4 FY26	Q1 FY27
Revenue	935	1,005	962	903	1,060 +13%	1,167 +16%	1,093 +14%	1,732 +92%
Expenses	895	964	928	857	994	1,108	1,030	1,451
EBITDA	40	42	34	46	66 +65%	59 +40%	64 +88%	281 +511%
Margin	4%	4%	4%	5%	6%	5%	6%	16%
Other income	2	2	4	3	3	4	4	3
Interest	11	10	14	10	10	10	8	13
Depreciation	6	6	7	7	7	7	8	8
Profit before tax	25	27	17	32	51 +104%	45 +67%	52 +206%	264 +725%
Tax rate	26%	24%	27%	18%	22%	24%	29%	22%
Net profit	18	20	12	26	40 +122%	34 +70%	37 +208%	206 +692%
EPS	1.86	1.98	1.19	2.68	3.68	3.31	4.16	19.65

How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

PHPO
49% H1 FY26 Revenue Share
Lubricants
28% H1 FY26 Revenue Share
Process and Insulating Oils
9.6% H1 FY26 Revenue Share
Channel Partners
13% H1 FY26 Revenue Share

Capital allocation

medium confidence

Capex Capex disclosed
- Silvassa capex for automobile lubricants to increase volumes by ~19,000 kL per annum
Ma'am, Silvassa capex is mostly for automobile lubricants. Once it comes on stream, it is expected to increase automobile lubricants volumes by close to 19,000 kL per annum and automobile lubricants has the highest gross margins. So it will have a significant impact on the EBITDA and profitability and PAT.
Debt Debt disclosed

Our current ratio remains healthy and our debt-to-equity ratio continues to be negligible, ensuring strong liquidity and financial flexibility.
Liquidity Cash ₹70 Cr Cash on hand includes fixed deposits of the bank of the company, ranging from INR 70 crores to INR 80 crores.

Cash on hand is somewhere in the range of INR 70 crores to INR 80 crores. This includes the fixed deposits of the bank of the company.

Guidance & targets

Volume

Overall Volume Growth Volume · FY26 · High confidence 10-12%

historically, we have been growing at 10% to 12% on volume terms. That will definitely be achieved during this year.

— Indrajit Bhattacharyya
H2 FY26 Volume Growth Volume · H2 FY26 · Medium confidence Slightly better than Q2 over Q1

we expect we are optimistic of growing in the same basis as we've grown in Q2 over Q1, and we expect Q3 and Q4 to be slightly better.

— Indrajit Bhattacharyya

Capacity Utilization

Texol UAE Full Capacity Utilization Capacity Utilization · 1.5 to 2 years · Medium confidence Full utilization

Texol, it will still take about 1.5 years to 2 years to reach full capacity utilization.

— Indrajit Bhattacharyya

Capacity

Additional Capacity Expansion Capacity · Next 2 to 3 years · High confidence No enhancement

I don't see us enhancing capacity for the next 2 to 3 years at least. We have to catch up with the capacity utilization, and then we will be doing the capex for the capacity.

— Indrajit Bhattacharyya

Profitability

EBITDA Margin Improvement Profitability · Next 2 quarters · Medium confidence Continuing improvement

we are definitely looking at continuing the same EBITDA improvement in the next 2 quarters.

— Indrajit Bhattacharyya
Gross Margin Spread Improvement Profitability · Next 2 quarters · Medium confidence Improved gross margins compared to Q1

This improvement will definitely be carrying forward to the next 2 quarters. We will be selling at improved gross margins for the next 2 quarters as compared to Q1.

— Indrajit Bhattacharyya
Profitability Margins Profitability · Ongoing · Medium confidence Maintained

we expect same profitability margins to be maintained.

— Indrajit Bhattacharyya

Realization

Realizations Realization · Ongoing · Low confidence Up from current levels

it should go up from the current levels.

— Indrajit Bhattacharyya

What to watch in Q3 FY26

Texol UAE Full Capacity Utilization

Within 1.5 to 2 years

Current ~70-72%

Target Full utilization

Why it matters

Reaching full utilization will significantly boost international revenue and profitability from this key asset.

Texol, it will still take about 1.5 years to 2 years to reach full capacity utilization.

Risks & concerns

International Market Headwinds
medium

Global consumption softness, geopolitical issues, and logistical challenges impacting international markets, mitigated by domestic focus.

Management acknowledged
Crude Oil Price Volatility
low

45-60 day lag in base oil price reflection and use of pass-through contracts with marquee customers, along with low inventory levels, mitigate impact.

Management mitigated
Increased Working Capital Days
low

Working capital days increased to 85 from 77 (March '25) due to higher inventory (58 days) and receivables (68 days), primarily from longer export lead times.

Management acknowledged

Q&A highlights

7 direct

Crude oil price fluctuations and freight costs impact Direct

So with the major marquee customers of ours, we have price pass-through contracts, and they do mitigate the risks. ... Ma'am, the Red Sea issues have more or less stabilized. Freight costs are still high, but we have been able to pass on this enhanced freight cost to most of our customers.

Addresses how the company manages external price and logistics volatility, a key concern in the oil sector.

Asked by Richa Shah

Texol UAE full capacity utilization timeline Direct

Texol, it will still take about 1.5 years to 2 years to reach full capacity utilization.

Provides a specific timeline for a key international asset to reach its full operational potential, impacting future revenue.

Asked by Richa Shah

Need for additional capacity expansion Direct

Ma'am, we've just enhanced capacity towards the end of last year. I don't see us enhancing capacity for the next 2 to 3 years at least. We have to catch up with the capacity utilization, and then we will be doing the capex for the capacity.

Clarifies the company's near-term capex strategy, indicating a focus on optimizing existing capacity rather than immediate new investments.

Asked by Vrudhi Vora

Silvassa capex impact on production and margins Direct

Ma'am, Silvassa capex is mostly for automobile lubricants. Once it comes on stream, it is expected to increase automobile lubricants volumes by close to 19,000 kL per annum and automobile lubricants has the highest gross margins. So it will have a significant impact on the EBITDA and profitability and PAT.

Highlights a specific growth project and its expected positive impact on high-margin product segments.

Asked by Vrudhi Vora

Headwinds and future growth outlook Direct

Farooq ji, We are hopeful that the headwinds that we were facing, the industry was facing is behind us. Things are looking up on the global geopolitical issues also... So we expect going forward, we will have an upward trend in the capacity utilization and in the profitability margins. We expect things to look up from now onwards.

Addresses investor concerns about past performance and provides a positive, forward-looking statement on capacity utilization and profitability.

Asked by Mohamad Farooq

Reasons for margin improvement Direct

The main reasons are reduction in finance cost, reduction in other expenses. The finance cost reduction is basically because our finance cost is mostly represented by way of discounting for import LCs, which we do from Indian branches of foreign banks. We have been able to convert a lot of our overseas suppliers into non-LC suppliers.

Explains the specific drivers behind the improved profitability, including financial and operational efficiencies.

Asked by Rajesh Agarwal

Strengthening PHPO segment and improving margins Direct

So basically, there are 3 or 4 initiatives which we're looking over there. One is, like I mentioned, new geographies. Second is additional products to existing customers. Third is newer customers in this field. And fourth is increasing our wallet share with them. So these are the 4 major endeavors that we are engaging into to increase this.

Details the strategic initiatives to enhance performance in the high-growth, high-margin PHPO segment.

Asked by Vivek Gupta

Business expansion plans beyond current lines Partial

No, I meant there are customers and products in the same line. There are customers whom we have not been able to tap into. There are products which we are still not doing. I meant that. I didn't say any special additional lines.

Clarifies that future expansion will focus on deepening penetration within existing product categories and customer segments rather than diversifying into entirely new business areas.

Asked by Suryakant

2 min read 6 chapters

Detailed narrative

Strong Q2 & H1 FY26 Financial Performance

Gandhar Oil Refinery delivered robust financial results for Q2 and H1 FY26. Consolidated manufacturing volumes for H1 FY26 grew 9% YoY to 261,524 KL. Q2 FY26 revenue increased 17.37% sequentially to INR 10,599 million, while EBITDA surged 43.04% sequentially to INR 658 million. Profit after tax for Q2 FY26 more than doubled YoY, growing 115.76% to INR 397 million, reflecting strong operational performance and disciplined cost management.

Strategic Focus on High-Purity & Specialty Oils (PHPO)

The company's strategic focus on PHPO (personal care, health care, and performance oils) is yielding results, accounting for 49% of H1 FY26 revenues. Management highlighted PHPO as the fastest-growing segment with strong demand from pharmaceuticals and personal care. Initiatives to strengthen this segment include expanding into new geographies, offering additional products to existing customers, acquiring newer customers, and increasing wallet share, with an aim to achieve higher margins.

Volume Growth and Capacity Utilization

Gandhar Oil expects to achieve its historical volume growth rate of 10-12% for FY26. Current capacity utilization stands at 85-90% for Silvassa and 95% for Taloja, while Texol UAE is at 70-72% and is projected to reach full utilization in 1.5 to 2 years. The company does not foresee the need for additional capacity expansion for the next 2-3 years, prioritizing catching up with existing capacity utilization.

Drivers of Margin Expansion

Margin improvement in Q2 FY26 was primarily driven by a reduction in finance costs, attributed to lower SOFR (sub-5%) and conversion of overseas suppliers to non-LC terms, reducing discounting interest. Additionally, disciplined cost management contributed to better margins. The manufacturing gross margin spread for Q2 FY26 was INR 8,662 per KL, and management expects this improvement to carry forward into the next two quarters.

Capital Allocation and Debt Management

The company maintains a healthy current ratio and a negligible debt-to-equity ratio, ensuring strong liquidity. Cash on hand, including fixed deposits, is in the range of INR 70-80 crores. While no immediate capacity expansion is planned, the Silvassa capex, primarily for automobile lubricants, is expected to significantly boost high-margin volumes by approximately 19,000 kL per annum once operational. The company remains open to inorganic growth opportunities and is currently evaluating options.

Outlook and Mitigation of Headwinds

Management expressed optimism that major headwinds, including global consumption softness, geopolitical issues, and logistical challenges, are now behind them. They anticipate an upward trend in capacity utilization and profitability margins going forward. While freight costs remain high, the company has successfully passed these on to most customers, and Red Sea issues have largely stabilized. The focus remains on operational excellence and leveraging growth opportunities in high-purity product segments.

This is an AI-generated summary of a publicly available earnings call transcript.

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