Gandhar Oil Refinery (India) Ltd (GANDHAR) Q2FY27 Concall Transcript - Sep-2026 Qtr
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Moderator: Ladies and gentlemen, good day and welcome to Q2 and H1 FY '27 earnings conference call hosted by Gandhar Oil Refinery (India) Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note, this conference is being recorded. I now hand the conference over to Miss Ashwi Shah from Adfactors IR. Thank you, and over to you, ma'am.
Ashwi Shah (Adfactors IR): Thank you. Good morning, everyone. On behalf of the company, I welcome you all to the earnings conference call for Q2 and H1 FY '27. Today on this call, we have with us from the management, Mr. Aslesh Parekh, Joint Managing Director, Mr. Indrajit Bhattacharyya, Chief Financial Officer. We will begin the call with opening remarks from the management, followed by a Q&A session. Please note that certain statements made during this call may be forward-looking in nature. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results or projections to differ materially from those statements. Gandhar Oil will not be in any way responsible for any actions taken based on such statements and undertakes no obligation to publicly update these forward-looking statements. I would now like to hand over the call to Mr. Aslesh Parekh for his opening remarks. Thank you, and over to you, sir.
Aslesh Parekh (Gandhar Oil Refinery (India) Ltd): Thank you. Good morning, everyone, and thank you all for joining us on this call. We have successfully sustained the strong performance momentum of Q1 FY '27 into the quarter two, delivering yet another exceptional quarter for Gandhar. During this quarter, we achieved our highest-ever quarterly revenue and for the second consecutive quarter, maintaining our gross margin spreads at elevated levels, demonstrating the strength and resilience of our business performance. What makes this performance particularly noteworthy is that our profit for the first half of '27 is already near three times the profit we reported in the entire FY '26. This performance reflects the strength of our diversified businesses and our continued focus on value-added products. The operating environment during this quarter continues to remain challenging. With ongoing tensions in the West Asia and disruptions to the global shipping routes, our key raw material base oil availability and prices remained uncertain and freight and insurance costs continue to affect supply chain planning. In this environment, our long-standing supplier relationship and multiple sourcing options proved proved to be an important strength. We continued with the sourcing strategy that served that served us well in Q1 buying from our long-term international suppliers as well as domestic base oil producers. This ensured uninterrupted supply to our customers. Moving to our strength-wise segment-wise performance, let me take you through the key developments across our businesses. Starting with our PHPO, which is the personal care, health care, performance oil segment, the volumes of the first half remained broadly in line with the previous year, although we saw a slight decline in the second quarter compared with the same period last year. This was primarily due to the slower offtake from certain key personal care customers who are facing increased competition from the newer and smaller brands. However, demand from the healthcare and pharmaceutical sectors remained steady. The PHPO continues to be our largest and the most important product category and we remain focused on strengthening our customer relationships and addressing evolving market dynamics. Moving to our PIO segment, the process and the insulating oil segment, this this business continued to deliver a very strong performance, with H1 volume growing 23% year-on-year. The growth was driven by healthy demand from the transformer, power, and the rubber industries. With increasing electricity demand and continued investments in the power infrastructure in India and globally, we see encouraging long-term growth opportunities for this segment. In our lubricant business, volumes remained broadly stable year-on-year, while improving by approximately 9% sequentially compared with our previous quarters. We view this sequential improvement positively and will continue to focus on expanding our customer base, strengthening existing relationships, and improving our product mix to support our future growth. Turning to our geographical performance, domestic volumes continued to register healthy Q-on-Q growth, despite price increases. However, export volume had moderated during this quarter, primarily due to the geopolitical developments in West Asia
Aslesh Parekh (Gandhar Oil Refinery (India) Ltd): Our subsidiary in UAE, export volumes were lowered during this quarter amid the geopolitical situation in the region and its instability. However, revenue from the unit increased during the quarter. Our focus remains on ensuring operational efficiency, maintaining reliable customer service and managing the and minimizing the impact of external disruptions. We are closely monitoring the development in West Asia, particularly particularly their implication for raw material availability, shipping and logistics. Our installed capacity on a consolidated consolidated basis now stands stands at 838,637 kl. As shared earlier, our Silvassa Unit 2 was affected by a heavy rainfall and a flood-like situation in July this year. Our priority was to carry out required cleaning, inspection, repair work and restart operations safely. Thanks to the efforts of our of our team, operations resumed in early August. The facility is insured and we have lodged our claim with the insurance and Mr. Indrajit will take you through the financial impact of the specific event. During this quarter, CRISIL reaffirmed our long-term rating at A+ Stable and our short-term rating at A1. At the same time, our rated bank facilities were enhanced to 1,114 crores. This reflects the confidence of our lending partners and give us headroom to support the larger scale of our procurement and businesses. Looking ahead, our priorities remains clear: deepen our presence across segments, expand into new geographies, move into higher value chain and expand capacity. While we remain watchful of global macroeconomic and geopolitical developments, the underlying demand environment remains encouraging. With a strong balance sheet, robust internal accruals and a disciplined approach to capital allocation allocation, we are very well positioned to capitalize on emerging opportunities and create long-term value for all all our stakeholders. With that, I would now hand over this call to Mr. Indrajit Bhattacharya, who will take you through the financial performance in a greater detail. Thank you. Over to you, Mr. Indrajit.
Indrajit Bhattacharyya (Gandhar Oil Refinery (India) Ltd): Thank you, Ashesh bhai, and good morning, everyone. I will now take you through the financial performance for Q2 and H1 FY '27. On a consolidated basis, revenue for the quarter stood at 1,847 crores compared with 1,068 crores in Q2 FY '26, a growth of about 73% and Rs. 1,732 crores in Q1 FY '27. This is the highest quarterly revenue in the company's history. The gross profit stood at Rs. 388 crores compared with 130 crores in Q2 FY '26, with a gross margin of 21%. The gross margin spread was approximately 29,128 per kl compared with 9,000 per kl in Q2 FY '26 and 28,000 per kl in Q1 FY '27. The spread the spreads this quarter reflect current market price market pricing supported by disciplinary disciplined sourcing and our index-linked pricing model. EBITDA for the quarter stood at 288 crores compared with 66 crores in Q2 FY '26, a growth of approximately 337% year-on-year. EBITDA was 15.6% compared with 6.2% in Q2 FY '26. Profit after tax stood at 186 crores compared with 40 crores in Q2 FY '26, a growth of approximately 368% year-on-year. EPS for the quarter was INR 17.9. For first half of FY '27, revenue stood at 3,579 crores, up 82% on year-on-year 82% year-on-year. EBITDA stood at 569 crores compared with 112 crores in H1 FY '26 and PAT stood at 392 crores compared with Rs. 66 crores, which is about the 2.9x the PAT for the entire FY '26. The flooding at Silvassa resulted in an inventory loss of approximately 21 crores. As this is a one-time event, we have presented it as an exceptional item. So, gross profit and EBITDA reflect the performance of the underlying business. We have lodged our claim with the insurers, and that insurance proceeds will be recognized once they are received. Our financial position strengthened further during the half during the half year. The stand-alone company remains debt-free as of date. Consolidated borrowings consolidated borrowings, which relate mainly to trade finance and borrowings at our overseas Texol level, reduced to about 85 crores as on 30th September '26 from 168 crores in March '26. With cash and bank balances of about 135 crores, we are net cash-positive at the consolidated level. Total equity increased to 1,771 crores from 1,400 crores in March '26. As Ashesh bhai mentioned, CRISIL has
Indrajit Bhattacharyya (Gandhar Oil Refinery (India) Ltd): confirmed our credit rating at credit, CRISIL has rated that at A+ stable and A1. These facilities are predominantly non-fund based and support our raw material procurement requirements. Our strong earnings performance in H1 provides us with significant flexibility in capital allocation. Our priorities remain focused on funding growth funding growth CAPEX largely through internal accruals, maintaining a prudent balance sheet and creating sustainable long-term value for our shareholders. We will continue to emphasize disciplined working capital management, operational efficiency and prudent capital allocation, while ensuring that our financial strength supports the company's long-term growth of objectives. With that, I conclude my remarks and we will now be pleased to take your questions. Thank you.
Moderator: Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. First question is from the line of Vinit Thakur from Plus91. Please go ahead.
Vinit Thakur (Plus91): Hi, sir. Thank you for the opportunity. Congratulations on the results. Sir, I noticed that we have increased the capacity from 597 to 8 lakh something in our PPT. Could you throw some color on that?
Indrajit Bhattacharyya (Gandhar Oil Refinery (India) Ltd): Vinit, nice to hear from you again. How are you?
Vinit Thakur (Plus91): I'm good. How are you?
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