Gandhar Oil Ref.

Gandhar Oil Refinery reported Q4 FY25 revenue of INR 961.7 crores and full-year FY25 revenue of INR 3,896.9 crores. Despite a healthy volume increase of around 3% from FY24 to FY25, revenues were impacted by a reduction in average realization from INR 82,824 per KL in FY24 to INR 76,223 per KL in FY25. Consolidated EBITDA for Q4 FY25 stood at INR 33.6 crores, and for the full year, it was INR 175.6 crores, with PAT at INR 12.3 crores and INR 83.5 crores respectively.

The company's international business, contributing around 40.2% of total sales, faced significant headwinds. Export revenue decreased from INR 2,402.8 crores in FY24 to INR 1,565.6 crores in FY25, primarily due to shipping disruptions in the Red Sea and ongoing geopolitical conflicts. To mitigate this, the company strengthened its domestic market presence, leading to a compensatory rise in domestic sales.

Despite pricing headwinds, Gandhar Oil maintained cost discipline, achieving reductions in both finance and employee costs in absolute and percentage terms. Standalone manufacturing volume grew to 99,934 KL in Q4 FY25. However, other expenses saw a slight increase, mainly due to higher shipping freight rates, which added approximately Rs. 13 crores this year, though these are expected to stabilize in coming quarters.

The company continues to expand its presence in the high-margin White Oil segment, particularly in Personal Care, Healthcare, and Performance Oil (PHPO). Following USFDA approval in October last year, the PHPO portfolio has seen increased orders and volumes. Management is actively working on adding new value-added products within this segment to further strengthen margins, with an expectation of a 4-5% increase in gross margin from these products.

Gandhar Oil has signed a non-binding agreement with JNPA for the proposed Vadhavan Port Project, a greenfield deep-draft major port expected to complete by FY30. The company intends to invest around INR 1,000 crores to set up a terminal for storage of base oils, chemicals, and other liquids, along with a blending plant. This strategic investment aims to significantly enhance logistics efficiency and strengthen long-term supply chain capabilities.

For FY26, management projects a volume growth of 10-12% and anticipates an improvement in average realizations from the current INR 76,223 per KL. The company aims to achieve high single-digit or double-digit gross and EBITDA margins going forward^⏳, leveraging inventory optimization and new product additions. No capacity enhancement is foreseen for the next 2-3 years, as current installed capacity is sufficient.

The company currently reports around INR 300 crores of debt, primarily associated with its Sharjah subsidiary, and expects this to reduce with quicker utilizations. Management emphasized having no long-term debt on a standalone basis and a strong balance sheet to fund new projects. While the Vadhavan project will be funded through a combination of equity, term loans, and potentially an SPV, the company remains open to inorganic growth opportunities.