Gandhar Oil Refines Performance: A Deep Dive into Q2 & H1 FY26 Earnings

Gandhar Oil Refinery (India) Limited has delivered a robust financial performance for the second quarter and first half of fiscal year 2026, showcasing resilience amidst global headwinds and a clear strategic focus on high-growth segments. The company, a prominent player in the specialty oils sector, reported a significant uplift in profitability driven by disciplined cost management, an optimized product mix, and strong demand from key end-user industries. This quarter's results underscore Gandhar Oil's ability to leverage its market leadership and strategic initiatives to drive sustainable growth.

For Q2 FY26, Gandhar Oil's revenue from operations stood at INR 1,059.9 crore, marking a healthy 17% sequential increase from Q1 FY26 and a notable rise from INR 935.1 crore in Q2 FY25. The first half of FY26 (H1 FY26) saw the company's revenue reach INR 1,962.9 crore. This revenue growth was complemented by an impressive surge in profitability. Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) for Q2 FY26 soared to INR 65.8 crore, a strong 43% increase over Q1 FY26 and significantly higher than INR 40.1 crore in Q2 FY25. The Profit After Tax (PAT) for Q2 FY26 more than doubled year-on-year to INR 39.8 crore, reflecting enhanced operational efficiency and financial prudence. For H1 FY26, EBITDA stood at INR 111.8 crore and PAT at INR 65.9 crore.

Segmental Performance and Strategic Focus

The Personal Care, Healthcare, and Performance Oils (PHPO) segment continues to be the cornerstone of Gandhar Oil's business, contributing 49.29% to the H1 FY26 consolidated revenue from finished goods. This segment's dominance is well-aligned with the global white oil market's projected growth, driven by rising demand from pharmaceuticals, personal care, and polymer industries. The company's strategic focus on high-purity and customized white oils, meeting stringent quality standards like USP and FDA compliance, positions it favorably within this expanding market. The concall highlighted that PHPO is their niche area and the fastest-growing segment.

Automobile lubricants emerged as another high-growth area with superior gross margins, contributing 28.09% to H1 FY26 revenue. The company's ongoing capital expenditure in Silvassa is primarily directed towards enhancing automobile lubricant production, expected to increase volumes by approximately 19,000 kL per annum once operational, promising a significant boost to EBITDA and profitability. Process and Insulating Oils (PIO) accounted for 9.67% of the revenue, while sales through channel partners contributed 12.94%.

Gandhar Oil's consolidated manufacturing volumes for H1 FY26 reached 261,524 kL, an increase of approximately 9% from H1 FY25, demonstrating robust operational scaling. The company's extensive accreditation process, including product trials, plant audits, and certifications, reinforces its position as a trusted supplier to leading global and Indian companies such as Procter & Gamble, Unilever, Marico, Dabur, and Emami.

Operational Efficiency and Risk Mitigation

Gandhar Oil has demonstrated strong operational efficiency and a prudent risk management framework. The manufacturing gross margin spread for Q2 FY26 stood at INR 8,662 per kL, indicating improved profitability. The company's ability to manage costs effectively was a key factor in its margin expansion. Finance costs saw a reduction, primarily due to the conversion of overseas suppliers to non-LC terms and a decrease in SOFR levels, leading to lower discounting interest and LC costs. Furthermore, tight discipline on other expenses contributed to the overall improvement in EBITDA.

Despite an increase in working capital days from 77 to 85 as of March '25, mainly due to higher inventory and receivables reflecting longer lead times in exports, the company maintains a healthy current ratio and a negligible debt-to-equity ratio, ensuring strong liquidity and financial flexibility. The management emphasized its just-in-time inventory approach and the use of price pass-through contracts with major customers, which effectively mitigate risks associated with crude oil price fluctuations.

Future Outlook and Strategic Roadmap

Looking ahead, Gandhar Oil is optimistic about sustaining its growth trajectory. Management expects demand momentum in India to remain firm, with global conditions gradually stabilizing. The company anticipates an upward trend in capacity utilization and profitability margins, with the second half of the fiscal year historically outperforming the first. Volume growth is expected to be in the range of 10-12% for the current fiscal year, a historical trend the company is confident of achieving.

Strategic initiatives include strengthening the customer base by increasing wallet share with existing clients and acquiring new ones, expanding the product portfolio, and responding to emerging industry trends. The company also aims to increase overseas sales by strategically expanding product offerings and leveraging existing customer relationships to enter new geographies like Indonesia, Europe, and the United States. Furthermore, Gandhar Oil is exploring opportunities to move up the value chain by expanding its contract manufacturing services for finished products, signaling a move towards more comprehensive solutions for its customers. The company's R&D department is continuously engaged in developing newer products in collaboration with buyers.

In conclusion, Gandhar Oil Refinery (India) Limited's Q2 and H1 FY26 performance reflects a company with strategic clarity, disciplined execution, and a robust business model. Its focus on high-growth segments, proactive risk management, and continuous pursuit of operational excellence position it well for sustained growth and value creation in the coming years.