Gandhar Oil Refinery (India) Limited — Q3 FY26 earnings call

Call held 3 Feb 2026

Management summary

Gandhar Oil Refinery reported a strong Q3 FY26 with consolidated revenue of INR 1,167 crores, up 16% YoY, and PAT of INR 34 crores. The company's 9M FY26 revenue reached INR 3,130 crores, with overseas sales contributing 45%. Management expressed optimism about increasing EBITDA margins, high single-digit growth in the PHPO segment, and improved gross margins, despite some moderation in PAT from the previous quarter and ongoing ramp-up at the Sharjah plant.

Highlights

  • Consolidated revenue for Q3 FY26 was INR 1,167 crores, reflecting a healthy year-on-year improvement of 16% and quarter-on-quarter growth of 10%.

  • 9M FY26 consolidated revenue stood at INR 3,130 crores, supported by steady volumes and consistent demand.

  • Q3 FY26 PAT was INR 34 crores, compared to INR 20 crores in Q3 FY25, reflecting strong year-on-year growth.

  • The manufacturing gross margin spread for Q3 FY26 stood at INR 7,271 per kL, indicating strong operational efficiency.

  • Company anticipates high single-digit growth in the PHPO and cosmetic industry, driven by expected FMCG sector turnaround and exports.

Concerns

  • Q3 FY26 PAT of INR 34 crores moderated from INR 40 crores in Q2 FY26.

  • Manufacturing gross margin spread of INR 7,271 per kL is noted as a 12-quarter low by an analyst, though management states it's improving from previous year.

  • Sharjah plant utilization is currently 70-72% and is expected to take another 2-2.5 years to reach 90-95% due to customer onboarding and raw material supply setup.

  • Transformer oil business is described as price-sensitive, tender-driven, with lower margins and higher debtors.

Key financials

2 periods

Headline

  • Consolidated Revenue
    ₹1,167 Cr
    YoY +16% QoQ +10%
  • EBITDA
    ₹59 Cr
  • PAT
    ₹34 Cr
    YoY +70% QoQ -15%
  • Manufacturing Gross Margin Spread
    7,271 per kL

9M

  • Consolidated Revenue
    ₹3,130 Cr
  • EBITDA
    ₹171 Cr
  • PAT
    ₹100 Cr

What they filed

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

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue935 1,005 962 903 1,060 +13%1,167 +16%1,093 +14%1,732 +92%
EBITDA40 42 34 46 66 +65%59 +40%64 +88%281 +511%
Net profit18 20 12 26 40 +122%34 +70%37 +208%206 +692%
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
    50% Revenue Contribution
  • Lubricants
    26.8% Revenue Contribution
  • PIO
    9.5% Revenue Contribution

Capital allocation

medium confidence
  • Capex Capex disclosed
    • Purchase of additional land for expansion at Silvassa and Taloja facilities
    But obviously, as you have seen during the Board meeting, the resolutions are now available publicly. We we are planning to purchase some additional piece of land in both our facilities for expansion.
  • Dividend ₹0.75/share (interim)
    Also felt great to get the dividend of INR0.75.

Guidance & targets

Profitability

  • EBITDA Margin Profitability · Annually, ongoing · High confidence in excess of 5%, 5.5% annually and keep going up
    So by operating margins, since we're talking about EBITDA, we're looking at EBITDA in excess of about 5%, 5.5% annually. And we expect it to keep going up from now.

    — Indrajit Bhattacharyya, Chief Financial Officer

  • Manufacturing Gross Margin Spread Profitability · Going forward · High confidence INR 7.8-7.9 per liter

    Previously INR 7-7.5 per liter → INR 7.8-7.9 per liter

    Going forward, yes, the whole of this year, we've been getting in excess of INR7-INR7.5 per liter. Going forward, we would like it to be close to INR8, but it should stay on INR7.8-INR7.9 per liter.

    — Indrajit Bhattacharyya, Chief Financial Officer

Capacity Utilization

  • Sharjah Plant Utilization Capacity Utilization · Next 2-2.5 years · Medium confidence 90-95%

    From 70-72% today

    it will take another two, two and half years for Sharjah to come on line or close to 90%, 95%.

    — Indrajit Bhattacharyya, Chief Financial Officer

Capex

  • New Capex Capex · End of this year or next year · Medium confidence Coming
    But the new capex will definitely be coming by maybe end of this year or next year at the most.

    — Aslesh Parekh, Joint Managing Director

Volume Growth

  • PHPO/Cosmetic Industry Growth Volume Growth · Near future · Medium confidence High single digits
    So we are very hopeful that the PHPO and the cosmetic industry will continue growing at a way in the near future in at least high single digits

    — Aslesh Parekh, Joint Managing Director

  • Overall Volume Growth Volume Growth · Next 2-3 years · Medium confidence 10-15% YoY
    Yes. Next one and a half to two years we will definitely be increasing our volumes quarter-on-quarter even without the existing land.

    — Indrajit Bhattacharyya, Chief Financial Officer

Revenue Mix

  • Export Revenue Share Revenue Mix · Short-medium term · Medium confidence 50-55%

    Previously 45% → 50-55%

    So it could be 50%, 55%. That's what we see in the short, medium term.

    — Indrajit Bhattacharyya, Chief Financial Officer

Capacity

  • Total Installed Capacity Capacity · Next 2 years · High confidence 6 lakh kiloliters + 60,000 kL (30% increase)

    Previously 6 lakh kiloliters → 6 lakh kiloliters + 60,000 kL (30% increase)

    No, not 6.60 lakhs. No, no, no. 6 lakhs is the total installed capacity. So another 30% increase, another 30%, so 60,000 will come up by the next 2 years or so.

    — Indrajit Bhattacharyya, Chief Financial Officer

Revenue

  • Peak Revenue per liter (from current capacity) Revenue · At peak utilization · Medium confidence INR 7,800 or INR 7,500 per liter
    INR7,800 or INR7,500 per liter.

    — Indrajit Bhattacharyya, Chief Financial Officer

Market context

  • Global white oil market CAGR Market Growth · 2025-2034 · High confidence 3%
    Based on the recent industry estimates, the market was valued at approximately $3.6 billion in 2025 and is expected to be around $4.66 billion expecting a CAGR of about almost 3% over 2025 to 2034 period.

    — Aslesh Parekh, Joint Managing Director

What to watch in Q4 FY26

Clarity on land purchase and new capex plans

Next quarter
Current Planning to purchase additional land at Silvassa and Taloja; new capex expected by end of this year or next.
Target More specific details on expansion plan, quantity, and value of capex.

Why it matters

Provides insight into future capacity expansion and long-term growth strategy.

So maybe we'll be in a position to give you more clarity in maybe a quarter to come as well with the amount of expansion plan and the quantity and the value of capex plan.

Risks & concerns

  • Macroeconomic environment and pricing volatility

    medium

    The company operates amidst a dynamic economic landscape with pricing volatility and logistical disruptions.

    Management acknowledged

  • FMCG and Pharmaceutical industry slowdown

    medium

    The cosmetics and pharmaceutical industry has not been performing well over the last 2 years, impacting PHPO demand.

    Management acknowledged

  • Transformer oil business characteristics

    low

    Transformer oil is a price-sensitive, tender-driven business with lower margins and higher debtors, making it less attractive than PHPO.

    Management acknowledged

  • Geopolitical conditions impacting freight rates

    low

    Analyst concern about volatile freight rates, but management states rates are stable and increases are passed on to customers via FOB shipments.

    Analyst downplayed

  • Long-term impact of EVs on automotive lubricants

    low

    The advent of EVs will eventually reduce automotive lubricant demand, though initial demand is still rising with economic growth.

    Management acknowledged

Q&A highlights

6 direct
Operating Margins and Segment Focus Direct
So by operating margins, since we're talking about EBITDA, we're looking at EBITDA in excess of about 5%, 5.5% annually. And we expect it to keep going up from now.

Clarifies management's profitability expectations and strategic focus on the PHPO segment due to its sticky customer base and better margins compared to other price-sensitive segments.

Asked by Rohit from i-thought PMS

Gross Margin Spread and Freight Costs Direct
The manufacturing gross margin spread for Q3 FY '26 stood at INR7,271 per kL, underscoring the strength of our manufacturing efficiency and disciplined operating execution. We remain focused on a prudent cash flow management and operational efficiency as we navigate a volatile global environment.

Addresses analyst concern about a 12-quarter low gross margin spread, attributing Q3 improvement to reduced other expenses (freight) and confirming ability to pass on freight increases to customers.

Asked by Ritesh Poladia from Girik Capital

Sharjah Plant Utilization and Future Expansion Partial
it will take another two, two and half years for Sharjah to come on line or close to 90%, 95%. Till then, this is the normal course of business, the customer accreditation I mean, accreditation by the customers is happening, and the raw material lines are being set up.

Provides a clear timeline for the ramp-up of the Sharjah plant, which is currently underutilized, and hints at future capacity expansion plans through land acquisition.

Asked by Ritesh Poladia from Girik Capital

Raw Material Price Volatility and Pass-Through Mechanism Direct
Around 35% of the business is on that price pass-through mechanism. The residual are on the other mechanism.

Explains how the company manages raw material price volatility, with a significant portion of business having price pass-through, mitigating risk.

Asked by Rohit from i-thought PMS

Working Capital Management Direct
There has been a general increase about 3 or 4 days in inventory and about 4, 5 days in receivables but in the same breath, what was happening earlier was my creditors levels was coming down. This year, we've been able to keep it at normal. So if I take all that, my cash conversion cycle this quarter is slightly better than the previous quarter, and we expect it to be around the same levels as this quarter.

Reassures investors about working capital efficiency despite some increases, highlighting a stable cash conversion cycle and managed debtor days.

Asked by Vivek Gupta from Star Investments

PHPO Segment Growth and Export Strategy Direct
So we are very hopeful that the PHPO and the cosmetic industry will continue growing at a way in the near future in at least high single digits, plus we are also dependent on our exports for our PHPO business as well.

Outlines the growth drivers for the core PHPO segment, including anticipated domestic demand recovery and increasing contribution from international markets.

Asked by Pratik Shah from Investing Alfa

Peak Revenue Potential from Current Capacity Direct
6 lakhs is the total installed capacity. So another 30% increase, another 30%, so 60,000 will come up by the next 2 years or so.

Quantifies the current and near-term maximum capacity and provides a revenue per liter figure, giving investors a sense of the company's revenue ceiling.

Asked by Rohit from i-thought PMS

Product Differentiation and R&D Partial
Yes, there a number of products that there are a few products, yes, where we are sole suppliers to certain specific customers. The revenue I mean, overall scheme of things would be far minimum, but I mean if you ask on the FMCG point of view, obviously, with some specific products would be in the range of 7%, 8% of the total revenue on the PHPO products.

Reveals ongoing R&D for differentiated products with multinational customers and highlights a small but significant portion of PHPO revenue from sole-supplier products, indicating potential for value-added growth.

Asked by Rohit from i-thought PMS

2 min read 5 chapters

Detailed narrative

Strong Revenue Growth and Profitability Improvement

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.

Strategic Focus on PHPO Segment and International Markets

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.

Operational Efficiency and Margin Management

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.

Capacity Expansion and Sharjah Plant Ramp-up

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.

Working Capital and Product Development

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.

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