Gandhar Oil Ref.

Gandhar Oil Refinery reported strong financial results for Q4 FY26, with consolidated revenue reaching INR 1,093 crores, marking a 14% year-on-year growth. For the full fiscal year 2026, the company achieved a revenue of INR 4,241 crores, representing a 9% increase over FY25. Profit after tax (PAT) for Q4 FY26 significantly improved to INR 37 crores from INR 12 crores in Q4 FY25, contributing to a full-year PAT of INR 137 crores. This performance led to an improved EPS of INR 13.8 for FY26, up from INR 8.18 in FY25, and enhanced return metrics with ROE at 10.21% and ROCE at 13.5%.

The company demonstrated robust operational efficiency, evidenced by a positive cash flow from operations of INR 127.77 crores in FY26, a substantial increase from INR 14.71 crores in the previous year. This improvement was attributed to better working capital management and a significant 28% reduction in finance costs, which decreased from INR 48.40 crores in FY25 to INR 37.59 crores in FY26. Consolidated gross margins also saw an improvement, rising from 10.96% in FY25 to 11.48% in FY26, with Q4 FY26 gross margins reaching 12.49%.

Gandhar Oil achieved a manufacturing volume of 5,54,212 kL for FY26, reflecting an 8% year-on-year growth. The company's Indian plants operated at an impressive 125% capacity utilization on a 2-shift basis, with an overall utilization of 93% across all facilities. The product portfolio remains well-diversified, with high-purity specialty products (PHPO) accounting for approximately 50% of the segmental mix, lubricants 27%, and PIO 10.19%. The company continues to focus on these high-value applications, particularly in healthcare and personal care categories, which exhibit steady structural growth.

Management acknowledged the ongoing geopolitical tensions, especially in the Middle East and the Strait of Hormuz, which introduced volatility in crude oil pricing and elevated freight costs. To mitigate these risks, Gandhar Oil strategically diversified its raw material sourcing, reducing reliance on Middle East suppliers to 20-22% and increasing procurement from Korean and domestic suppliers like BPCL and Indian Oil. The Texol plant in Sharjah, initially impacted by port closures, has seen normalization, with domestic sourcing now complementing imports to ensure uninterrupted supply.

International business served as a key growth driver, contributing 42.8% to consolidated revenues. The company is actively expanding its global footprint, identifying Asia Pacific, Africa, and South America as regions with strong long-term growth opportunities. While tariffs in the US market pose some concerns, Gandhar's exposure there is minimal, and efforts are underway to enhance product and supply chains in that region. The company aims to continue finding new customers and growing existing business across these key international markets.

To support future growth, Gandhar Oil has acquired land in Taloja for plant expansion, as its existing facilities are operating at nearly 100% capacity. The company is developing a detailed capacity expansion plan for the next two years, with specific capex budgets for the Taloja facility expected to be clarified in subsequent quarters. Additionally, a subsidiary has been established in South Africa to explore business opportunities, though no specific investment plans for a plant or office have been finalized yet.

Gandhar Oil maintains a strong financial position, being debt-free with substantial reserves exceeding INR 1,200-1,500 crores. Management expressed confidence in sustaining the current consolidated EBITDA margin of 6% and aims to achieve higher levels in the future. This will be driven by continued focus on cost efficiencies, optimizing the product mix towards higher-margin PHPO products, and expanding the customer base. The company anticipates maintaining its historical double-digit volume growth trajectory.