Gulf Oil Lubricants India Limited — Q3 FY25 earnings call

Call held 7 Feb 2025

Management summary

Gulf Oil Lubricants India Limited delivered a strong Q3 FY25 performance, achieving record revenue and EBITDA despite macroeconomic headwinds. The company saw robust volume growth in core lubricants, driven by double-digit expansion in key segments like MCO and B2B. Strategic initiatives, including partnerships with Nayara and Piaggio, and growth in new energy businesses like Tirex and Battery, contributed to the positive results. Management expressed confidence in maintaining growth trajectory and margin targets.

Highlights

  • Achieved highest ever quarterly revenue of INR 900 crore, up 11% YoY.

  • Recorded highest ever quarterly EBITDA of INR 122 crore, with an EBITDA margin of 13.5%.

  • Core lubricants volumes reached a record 38,500 kl, growing 7% YoY.

  • Motorcycle Oil (MCO), B2B, and Industrial segments showed double-digit growth.

  • Tirex, the DC fast charger subsidiary, reported INR 40 crore top line for 9M FY25, nearly 3x growth YoY, aiming to double revenues annually.

  • Battery segment achieved INR 21 crore revenue in Q3 FY25 and turned EBITDA positive for the current year.

  • Maintained a debt-free status with a net cash position upwards of INR 450 crore at the end of December.

  • Declared an interim dividend of INR 20 per share (1000% on face value of INR 2).

Key financials

2 periods

Headline

  • Revenue
    ₹900 Cr
    YoY +11%
  • EBITDA
    ₹122 Cr
  • EBITDA Margin
    13.5%
    QoQ +0.9%
  • Core Lubricants Volume
    38,500 kl
    YoY +7%

9M FY25

  • PAT Growth
    21.5%
    YoY +21.5%
  • EBITDA Growth
    14%
    YoY +14%

What they filed

Q1 FY27: revenue up 32.5%, net profit up 32.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue849 905 915 996 957 +13%998 +10%1,040 +14%1,320 +33%
EBITDA107 122 124 127 118 +10%130 +7%135 +9%170 +34%
Net profit84 98 92 97 87 +4%77 −21%90 −2%128 +32%
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

  • Motorcycle Oil (MCO)
    double-digit YoY Growth
  • B2B & Industrial
    double-digit YoY Growth
  • Diesel Engine Oil (DEO)
    39% Contribution to Mixmid-single-digit YoY Growth
  • Personal Mobility
    23% Contribution to Mix2% Growth
  • AdBlue
    36,000 kl Volume
  • Tirex (DC Fast Charger)
    ₹40 Cr Top Line (9M FY25)nearly 3x YoY Growth (9M FY25)
  • Battery Segment
    ₹21 Cr Revenue (Q3 FY25)positive current year EBITDA Status

Guidance & targets

Profitability

  • EBITDA Margin Profitability · Q4 FY25 and Q1 FY26 · High confidence 12-14%
    We will definitely be maintaining our guided band of EBITDA, which is 12% to 14%, going forward as well, at least for Q4 and Q1 of the next year, which is what we currently estimate.

    — Manish Gangwal, Chief Financial Officer

  • EBITDA Margin Aspiration Profitability · next 2-3 years · Medium confidence 14-16%

    Previously 12-14% → 14-16%

    Given that if we can improve our premium grades to get a margin of 12% to 14%, we'd be happy to look at the next trajectory of 14% to 16% as and when we come across that, the sooner the better for all of us.

    — Ravi Chawla, Managing Director and CEO

Volume

  • Overall Volume Growth Volume · annual basis · Medium confidence 2x to 3x market growth rate
    Our objective has always been to grow 2x to 3x the market... trajectory-wise, 2x to 3x growth is what we aim at on an annual basis.

    — Manish Gangwal, Chief Financial Officer

  • AdBlue Volume Growth Volume · next 2-3 years · Medium confidence 10-15%
    You'll see, we have been looking at 10% to 15% growth in the segment.

    — Ravi Chawla, Managing Director and CEO

  • Premium Product Growth Volume · ongoing · High confidence at least twice the overall growth
    What we're trying to do is suppose we are growing 7% overall, we would like to have the premium products growing at least twice that, and the percentage varies of that across segments, and that is what our focus is towards.

    — Ravi Chawla, Managing Director and CEO

Revenue

  • Tirex Revenue Growth Revenue · next few years · High confidence double every year
    we said that we would like to double the revenues every year for the next few years, and we want to highlight that we are on course for that.

    — Manish Gangwal, Chief Financial Officer

Capex

  • Annual Capex Capex · annually · High confidence INR 30-40 crore
    Our trajectory of capex has been around INR 30 crore annually. Going forward, we estimate to have a capex of around INR 30 crore to INR 40 crore.

    — Manish Gangwal, Chief Financial Officer

Partnerships

  • EV Fluid Partnerships Partnerships · current · High confidence more than 10
    I think EV fluids is a small volume. But as we have mentioned earlier, we have more than 10 partnerships in that area.

    — Ravi Chawla, Managing Director and CEO

Dividend

  • Interim Dividend Dividend · Q3 FY25 · High confidence INR 20 per share
    I'd like to also end by mentioning that we have declared a very good return to our shareholders in terms of an interim dividend of INR 20 per share, which is 1,000% on the face value of INR 2.

    — Ravi Chawla, Managing Director and CEO

Risks & concerns

  • Macroeconomic headwinds and elections

    medium

    Macroeconomic headwinds in India, including elections, slowed down in Q2 and Q3 FY25, but early signs of demand recovery are now visible.

    Management acknowledged

  • Rupee depreciation impacting landed costs

    medium

    Rupee depreciation, especially from November onwards, increased landed costs of imported base oil, requiring margin management actions.

    Management acknowledged

  • Crude oil price volatility

    medium

    While crude is currently stable ($75-$80 range), sustained movements impact base oil prices with a 1-2 month lag, requiring continuous monitoring.

    Management acknowledged

  • Competitive intensity in AdBlue segment

    low

    AdBlue is a consumable product, and competitive intensity might increase, requiring focus on distribution and maintaining margins.

    Management acknowledged

Areas of evasion (1)

  • Specific commercial arrangements for Nayara tie-up

Q&A highlights

3 direct
Margin trend given crude stability and rupee depreciation Direct
As long as the crude remains in this trajectory of $75 to $80, the input costs should remain stable... but the landed cost due to rupee depreciation obviously goes up... We will definitely be maintaining our guided band of EBITDA, which is 12% to 14%, going forward as well, at least for Q4 and Q1 of the next year.

Addresses investor concerns about profitability amidst currency fluctuations and commodity price stability, providing clear margin guidance.

Asked by Probal Sen, ICICI Securities

Tirex growth trajectory and investment requirements Direct
Their last year's full year turnover was around INR 25 crore, this year in the 9-month period, they are at around INR 40 crore... we said that we would like to double the revenues every year for the next few years, and we want to highlight that we are on course for that... A part of that money is still lying with them to take up some of the expansion projects for capacity increase... for the next 1 to 2 years, they have sufficient capacity.

Provides specific growth targets and clarifies that current investments are sufficient for near-term expansion, reducing concerns about immediate capital calls.

Asked by Probal Sen, ICICI Securities

Capital expenditure plans and capacity expansion Direct
Our trajectory of capex has been around INR 30 crore annually. Going forward, we estimate to have a capex of around INR 30 crore to INR 40 crore... We are, of course, running our plants at around 100% capacity... we have sufficient capacity even for the next 2 to 3 years as well.

Details the company's capex strategy and reassures investors about existing capacity to support future growth without immediate large-scale investments.

Asked by Yogesh Patil, Dolat Capital

2 min read 6 chapters

Detailed narrative

Record Performance in Q3 FY25

Gulf Oil Lubricants achieved its highest-ever quarterly revenue of INR 900 crore, marking an 11% year-on-year growth. This was complemented by a record EBITDA of INR 122 crore, resulting in an EBITDA margin of 13.5%, a sequential improvement of 90 basis points. Core lubricants volumes also reached a new high of 38,500 kl, growing 7% year-on-year, demonstrating resilience despite macroeconomic headwinds.

Segmental Growth Drivers

Growth was broad-based, with Motorcycle Oil (MCO), B2B, and Industrial segments all reporting double-digit growth. The premium range of products saw growth at double the normal rate. Diesel Engine Oil (DEO) contributed 39% to the mix, while personal mobility increased to 23%. AdBlue volumes, which were soft in Q2, picked up significantly in Q3, and the company aims for 10-15% growth in this segment over the next 2-3 years.

New Energy Business Expansion

The company's new energy ventures showed promising progress. Tirex, the DC fast charger subsidiary (51% stake), achieved a 9-month top line of INR 40 crore, nearly tripling last year's figure, with a target to double revenues annually. The Battery segment reported INR 21 crore in Q3 FY25 revenue and turned EBITDA positive for the current year, with ongoing localization efforts. The EV fluids segment, though small, has over 10 partnerships, with a focus on securing more OEM contracts.

Strategic Partnerships and Brand Initiatives

Gulf Oil strengthened its market reach through strategic partnerships, expanding its lubricant and AdBlue sales to Nayara's network of 6,000 outlets. The exclusive partnership with Piaggio India for the 2-wheeler segment was renewed until 2032, and for the Commercial Vehicle segment until 2030. A 360-degree mega brand campaign, 'The Unstoppables,' featuring three brand ambassadors, was successfully launched to enhance consumer engagement and brand affinity.

Financial Health and Capital Allocation

The company maintained a strong financial position, remaining debt-free with a net cash position exceeding INR 450 crore at the end of December. Annual capital expenditure is projected to be in the range of INR 30-40 crore, primarily for infrastructure additions and potential plant expansion at Silvassa, where current capacity is 90,000 kl. The company also declared an interim dividend of INR 20 per share, reflecting a 1000% payout on the face value.

Outlook and Margin Management

Management is confident in maintaining an EBITDA margin band of 12-14% for Q4 FY25 and Q1 FY26. The long-term aspiration is to achieve 14-16% EBITDA margins over the next 2-3 years through premiumization efforts and operating leverage. While rupee depreciation impacts landed costs of imported base oil, crude oil stability at $75-$80 per barrel is expected to keep input costs stable, with pricing actions and scheme rationalization used for margin management.

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