Gandhar Oil Ref.

Gandhar Oil Refinery reported a robust Q3 FY26, with consolidated revenue reaching INR 1,167 crores, marking a 16% year-on-year and 10% quarter-on-quarter increase. For the nine-month period, total revenue stood at INR 3,130 crores. Profit after tax (PAT) for Q3 FY26 was INR 34 crores, a significant improvement from INR 20 crores in Q3 FY25, and 9M FY26 PAT was INR 100 crores. The company's EBITDA for Q3 FY26 was INR 59 crores, contributing to a 9M EBITDA of INR 171 crores, underscoring resilient operational performance.

The PHPO segment remains a core focus, contributing 50% to the 9M FY26 segmental revenue mix, followed by lubricants at 26.8% and PIO at 9.5%. Management anticipates high single-digit growth in the PHPO and cosmetic industry, driven by an expected turnaround in the FMCG sector post GST rate cuts and increased liquidity. International markets are crucial, with overseas sales accounting for 45% of the 9M FY26 consolidated revenue, and are expected to grow to 50-55% in the short-medium term, offering slightly better margins.

The company demonstrated strong manufacturing efficiency, with a gross margin spread of INR 7,271 per kL in Q3 FY26. Management attributed EBITDA improvement to effective expense management, better product sales, and efficient buying. They are optimistic about increasing EBITDA margins from the current 5-5.5% annually and aim for gross margins to stabilize around INR 7.8-7.9 per liter, up from INR 7-7.5 per liter earlier in the year. Freight rate increases are largely passed on to customers, with a shift towards FOB shipments.

Gandhar Oil's total installed capacity is 6 lakh kiloliters, with plans to add another 60,000 kL (a 30% increase) over the next two years. The Sharjah plant, operational since 2017-2018, is currently at 70-72% utilization. Management expects it to reach 90-95% utilization in the next 2-2.5 years, as customer accreditation and raw material supply lines are established. The company is also planning to purchase additional land at its Silvassa and Taloja facilities for future expansion, with more clarity expected next quarter.

Despite a slight increase in inventory (3-4 days) and receivables (4-5 days), the cash conversion cycle in Q3 FY26 was slightly better than the previous quarter. The company maintains a lean inventory strategy, avoiding significant inventory gains or losses. Management confirmed ongoing R&D trials with multinational customers for specific product formulations, indicating a focus on differentiated, value-added products, although these are currently under development and not yet generating revenue.