Financial Performance Highlights

Q2 FY27 Consolidated Results:

  • Revenue: INR1,847 crores (highest quarterly revenue in company's history)
  • Growth: 73% YoY (vs INR1,068 crores in Q2 FY26)
  • Sequential growth from INR1,732 crores in Q1 FY27
  • Gross Profit: INR388 crores (vs INR130 crores in Q2 FY26)
  • Gross Margin: 21%
  • Gross Margin Spread: INR29,128 per kl (vs INR9,000 per kl in Q2 FY26 and INR28,000 per kl in Q1 FY27)
  • EBITDA: INR288 crores (growth of 337% YoY from INR66 crores)
  • EBITDA Margin: 15.6% (vs 6.2% in Q2 FY26)
  • PAT: INR186 crores (growth of 368% YoY from INR40 crores)
  • EPS: INR17.9

H1 FY27 Consolidated Results:

  • Revenue: INR3,579 crores (up 82% YoY)
  • EBITDA: INR569 crores (vs INR112 crores in H1 FY26)
  • PAT: INR392 crores (vs INR66 crores in H1 FY26)
  • H1 PAT is nearly 3x the entire FY26 PAT

Operational & Segment Performance

Capacity Update:

  • Total Installed Capacity: 838,637 kiloliters (consolidated)
  • Indian plants: 602,713 kl (enhanced from capitalization of CWIP over past 1.5-2 years)
  • Texol (UAE subsidiary): 235,924 kl
  • Capacity Utilization:
  • Standalone: 82%
  • Consolidated: 61%
  • Operations: Currently running at 2 shifts (can operate at 3 shifts for 130% capacity)

Segment-wise Performance:

PHPO (Personal Care, Healthcare, Performance Oil):

  • H1 volumes broadly in line with previous year
  • Q2 volumes declined slightly YoY due to slower offtake from personal care customers facing increased competition
  • Healthcare and pharmaceutical demand remained steady
  • Standalone PHPO contribution improved from 45% to 50-51% domestically

PIO (Process and Insulating Oil):

  • H1 volumes grew 23% YoY
  • Growth driven by healthy demand from transformers, power, and rubber industries
  • Encouraging long-term growth opportunities with increasing electricity demand and power infrastructure investments

Lubricants:

  • Volumes remained broadly stable YoY
  • Sequential improvement of approximately 9% from previous quarter

Geographical Performance:

  • Domestic volumes: Healthy quarter-on-quarter growth despite price increases
  • Export volumes: Moderated due to geopolitical developments in West Asia impacting shipping and logistics
  • Overseas revenue (including Texol): INR1,721 crores, contributing 48% of consolidated revenue

Texol Subsidiary (UAE):

  • Export volumes lower due to geopolitical situation and regional instability
  • Revenue increased during the quarter despite volume challenges
  • Located near Strait of Hormuz, significantly affected by shipping disruptions

Exceptional Item

  • Silvassa Unit 2 Flood Impact: INR21 crores loss due to heavy rainfall and flood-like situation in July 2026
  • Loss includes inventory loss, contamination of stock, and expenses to restart operations
  • Operations resumed in early August 2026 after cleaning and repair work
  • Facility is insured; claim lodged with insurers
  • Insurance proceeds will be recognized upon receipt

Financial Position & Credit Update

  • Standalone company: Debt-free as of September 30, 2026
  • Consolidated borrowings: Reduced to INR85 crores (from INR168 crores in March 2026)
  • Mainly trade finance and borrowings at Texol level
  • Cash and bank balances: INR135 crores
  • Net cash positive at consolidated level
  • Total equity: Increased to INR1,771 crores (from INR1,400 crores in March 2026)
  • CRISIL Ratings reaffirmed:
  • Long-term: A+/Stable
  • Short-term: A1
  • Rated bank facilities enhanced to INR1,014 crores (predominantly non-fund based for raw material procurement)

Key Operational Challenges

  • Geopolitical tensions in West Asia affecting shipping routes through Strait of Hormuz
  • Base oil availability and prices remain uncertain due to refinery closures and vessel disruptions
  • Freight and insurance costs continue to affect supply chain planning
  • War risk premium added to vessels coming out of Hormuz
  • Insurance rates have increased

Management Commentary & Outlook

  • Sourcing strategy: Buying from long-term international suppliers and domestic base oil producers to ensure uninterrupted supply
  • Pricing model: Index-linked pricing supported disciplined sourcing and current market pricing
  • Margin sustainability: Optimistic about maintaining current gross margin levels in Q3 and Q4 FY27
  • Volume guidance: Previously guided 8-11% volume growth for FY27; H1 growth approximately 1% due to Dubai plant challenges
  • Standalone volume growth: 16% YoY in H1
  • Targeting volume recovery once Strait of Hormuz situation eases
  • Future margins: Expected to settle between current INR29,000/kl and pre-war INR8,000-9,000/kl levels when conflict resolves
  • Product development: New products under formulation and R&D to expand value-added product portfolio

Working Capital & Cash Flow

  • Trade receivables: Increased but at 70-75 days sales (was 37 days earlier)
  • Inventory management: Maintaining low inventory levels; no significant inventory gains
  • Cash flow from operations: INR183 crores (consolidated)
  • Employee expenses: Included one-time INR16 crores ex gratia payment across the board

Average Realizations

  • Current selling price: Approximately INR135,000 per kl
  • Previous year realization: Approximately INR80,000 per kl

Market Position & Competition

  • Oligopolistic market structure due to sourcing challenges and established supplier networks
  • No low-cost substitutes available for application-oriented products
  • Strong customer relationships with marquee names (Unilever, Procter & Gamble) who are finicky about sourcing
  • Product approvals and formulation expertise provide competitive advantage

#Tags: #GandharOil #Q2Results #RecordRevenue #GeopoliticalImpact #OilRefining #SEBIDisclosure #RegulatoryCompliance #FinancialUpdate #Neutral