Gandhar Oil Refinery Q4 results: Analysing revenue and profit trends

Gandhar Oil Refinery (India) announced its Q4 and full-year results on May 22, 2024. This blog aims to provide an analysis of Gandhar Oil Refinery Q4 results, focusing on key metrics and performance indicators. We will break down the numbers to help you understand the company’s financial health and future outlook.

Gandhar Oil Refinery overview

Gandhar Oil Refinery was set up in 1992 and plays an active role in the speciality oils industry. Currently, the company sells its flagship brand “divyol” products which are white oils, waxes, jellies, automobile oil, industrial oil, transformer oils, and rubber processing oils. It has enjoyed patronage from many customers like Procter &Gamble, Unilever, Marico, etc. 

The business is well known for white oils. In FY23, it held a 26.5% market share in India and a 9.6% market share globally in the calendar year 2022. By FY24, Gandhar Oil Refinery had become one of the top five global players in this segment.

There are three primary business divisions within the organisation. The PHPO or personal care, healthcare, and performance oils division is the largest, contributing approximately 52.30% of revenue from finished goods in FY24. The lubricants division, covering automotive and industrial oils, accounted for 31.04% of revenue. Lastly, the PIO or process and insulating oils division made up 7.01% of the revenue.

It may be noted that Gandhar Oil is also presently operational in more than one hundred countries across the world. International activities in FY24 accounted for 58% of overall output. The company has its manufacturing plants in three locations that include Taloja, Maharashtra, Silvassa, Dadra & Nagar Haveli and Sharjah of UAE.

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Gandhar Oil Refinery Q4 results

For the March quarter of FY24, Gandhar Oil reported consolidated revenues of ₹939.24 crore, a nearly 4.8% decline from ₹986.68 crore in Q4FY23. This represents a significant decrease, with a 14.8% drop compared to ₹1,102.61 crore in the December quarter of FY24. The decline in revenues can be attributed to delays in import shipments, which led to higher average inventory costs.

During the March quarter of 2024, the company’s net profit was ₹12.11 crore, a 57% decrease from ₹28.38 crore during the same period the previous year. Net profit also decreased from ₹50.91 crore in Q3FY24 by more than 76%. Despite these challenges, Gandhar Oil remains optimistic about the demand for its products in APAC and the Americas, which continue to be its leading overseas markets.

The EBITDA for Q4FY24 stood at ₹33.6 crore, also saw a significant 60.5% decrease from the previous quarter and almost 28% decline from previous year. For the quarter, the manufacturing gross margin spread was ₹8,815 per KL. 

Although the financial performance was impacted, the company completed its capex at the Taloja plant and saw a 12% increase in manufacturing volumes. Overseas sales contributed 46.3% to the total sales for the quarter.

Source: Gandhar Oil Refinery Investor Presentation Q4FY24

Also read: Petronet LNG Q4 results: Net profit soars 24%

About dividend

For the fiscal year 2024, Gandhar Oil proposed a final dividend of ₹0.50 per equity share. The total equity share capital is ₹19,57,39,644, which is made up of 9,78,69,822 fully paid equity shares, each of which has a face value of ₹2.

This proposed dividend, which would be the company’s first payout since its initial public offering (IPO), represents a 25% payout. At the next annual general meeting (AGM), shareholders will be asked to approve the dividend payment.

Shareholders’ approval is required for the dividend to be disbursed. The AGM will provide the platform for this decision.

Also read: A guide to stock dividend

FY24 financial analysis

Gandhar Oil Refinery’s revenue for FY24 stood at ₹4,113.21 crore, showing a slight increase of nearly 1% from ₹4,079 crore in FY23. This modest growth reflects the steady demand for the company’s products despite market challenges. Net profit for the year declined by approximately 23%, reaching ₹165.31 crore compared to ₹213.93 crore in the previous fiscal year. 

The manufacturing gross margin Spread for FY24 was ₹9,990 per KL. Overseas markets, particularly in the APAC and Americas regions, continued to be strong, contributing 58.5% to the total sales. 

The PHPO division saw significant growth, with a CAGR of 39.6% in revenue and 21.3% in sales volume from FY21 to FY24. Consumer and healthcare end industries, which are primary markets for PHPO products, contributed 71.84% of the division’s revenue in FY24.

Source: Gandhar Oil Refinery Investor Presentation Q4FY24

Gandhar Oil Refinery share price performance

Gandhar Oil Refinery entered the bourses on November 30, 2023. The shares were listed on the NSE at ₹298 each, significantly higher than the issue price of ₹169 per share, reflecting a premium of over 76%. This impressive debut showcased strong investor demand.

Following its initial rise, Gandhar Oil Refinery share price experienced a decline. After reaching its 52-week high of ₹344.05 apiece soon after listing, the share price fell nearly 30% from its initial listing value.

As of May 28, 2024, the stock is priced at ₹204 per share. Over the past year, Gandhar Oil’s share price has given a negative return of 32.17%. 

Additionally, Gandhar Oil’s share price has a negative return of 27.05% over a five-year period, indicating a longer-term downward trend.

Bottomline 

Gandhar Oil Refinery has faced significant challenges in FY24, with declining profits and fluctuating share prices despite steady revenue growth. The company remains optimistic about future demand, especially in overseas markets.

Investors should consider both the recent financial performance and the strategic initiatives undertaken, such as capex completion and market expansion when evaluating the potential for future growth and stability.