Gulf Oil Lubricants India Limited
Q1 FY26
Call date · August 14, 2025
1 · Management Commentary
Key Positives
- Achieved highest ever quarterly volume, revenue, and EBITDA.
- Double-digit volume growth at 11%, 3x industry growth (industry at ~3–3.5%).
- Strong performance across B2C (notably motorcycle oil), B2B, and industrial segments.
- OEM franchisee workshop business delivered high double-digit growth, especially in agri-OEMs.
- EV charger subsidiary Tirex posted 163% revenue growth and turned EBITDA positive.
- Silvassa plant received IGBC platinum certification; recognized by OEMs (Ashok Leyland, agri-OEMs).
- Board approved capacity expansion from 140mn to 240mn litres (Rs. 55 crore outlay).
- Net debt free; cash balance above Rs. 1,000 crore; final dividend of Rs. 28/share declared.
Key Negatives
- Factory fill business was flattish due to new vehicle production trends.
- AdBlue volume growth was flattish YoY, attributed to absence of prior year’s promotional schemes.
- Higher A&P spend this quarter due to IPL and campaign activity, impacting margins.
Forward Guidance
- Capex: Rs. 55 crore for capacity expansion (Chennai and Silvassa) to 240mn litres by March 2027; Chennai to come online earlier.
- New products/segments: Continued focus on premiumization, new pack launches (e.g., Gulf Pride API SP), and expansion in EV chargers (Tirex now manufacturing AC chargers).
- Expected client wins/losses: Ongoing expansion of Nayara tie-up (currently ~1,500 outlets, targeting 6,500+), continued OEM recognition and awards.
- Revenue/margin outlook: Maintain 2–3x industry volume growth; margin band of 12–14% to be sustained; AdBlue expected to grow 10–15% annually.
- Other strategic initiatives: Focus on increasing distribution (urban and rural), aggressive growth in segments with <5% market share (industrial, passenger cars), and continued investment in brand and sustainability.
2 · Q&A Highlights
Q 1 (Composite): What is the rationale and expected impact of the announced capacity expansion?
A (Management):
• Expansion aligns with sustained 2–3x industry growth; will provide flexibility for product mix and packaging; Chennai to be ready before Silvassa; full 240mn capacity by March 2027; enables efficient two-shift operations and supports future volume growth.
Q 2 (Composite): What is the outlook and margin trajectory for the Tirex (EV charger) business?
A (Management):
• Tirex is nascent but growing rapidly (163% YoY, Rs. 24–25 crore quarterly revenue); turned EBITDA positive this quarter; aim to reach Rs. 400–500 crore topline in 4–5 years; long-term goal is to achieve lubricant-like EBITDA margins in 3–4 years.
Q 3 (Composite): How is the company addressing competition, especially as peers focus on volume growth?
A (Management):
• Strategy is to focus on industry growth and core strengths; continue to invest in brand and distribution; aim to grow 2–3x industry rate; ad spend calibrated at 3–4% of revenue, down from 6–7% a decade ago.
Q 4 (Composite): What is the company’s approach to CNG, industrial, and passenger car lubricant segments?
A (Management):
• CNG: Present but selective due to price sensitivity; premium products for CNG buses;
• Industrial: Double-digit growth, focus on customer acquisition, <5% market share but growing;
• Passenger car: Market share <5%, targeted for aggressive growth (aiming for 3x+ market growth).
Q 5 (Composite): What is the status and outlook for AdBlue and battery businesses?
A (Management):
• AdBlue: 38,000 KL this quarter; flattish YoY due to last year’s promotions; expect 10–15% annual growth;
• Battery: Rs. 16 crore turnover this quarter; localized toll manufacturing for better cost and security.
Q 6 (Composite): What is the impact and progress of the Nayara tie-up and rural market penetration?
A (Management):
• Nayara: Early stage, ~1,500 outlets reached out of 6,500+; both lubricants and AdBlue supplied; penetration to increase in coming quarters.
• Rural: Organized approach with Gulf Rural Stockists; double-digit growth continues; focus on agri and motorcycle segments.
Q 7 (Composite): Any plans for acquisitions or strategic partnerships?
A (Management):
• Continually evaluate opportunities, especially in niche industrial segments; nothing imminent to announce.
Q 8 (Composite): How will government schemes (e.g., PM E-DRIVE) and EV trends affect the business?
A (Management):
• PM E-DRIVE extension will aid EV penetration, indirectly benefiting Tirex charger business; lubricant business expected to grow 3–4% for 15–20 years despite EV adoption.
3 · Other Key Numbers
- Core lubricant volume (Q1 FY26): 41,000 KL
- AdBlue volume (Q1 FY26): 38,000 KL
- Tirex (EV charger) revenue (Q1 FY26): Rs. 24–25 crore
- Tirex FY25 revenue: Rs. 80 crore
- Battery business turnover (Q1 FY26): Rs. 16 crore
- Consolidated quarterly revenue: Crossed Rs. 1,000 crore (first time)
- Gross margin improvement: +140 bps YoY
- EBITDA margin (Q1 FY26): 12.7%
- Dividend: Rs. 28/share; record date September 19, 2025
- Dividend payout ratio (FY25): 65%
- Cash balance: Above Rs. 1,000 crore
- A&P spend: 3–4% of revenue
- OEM franchisee workshop share: Double-digit % (exact not disclosed)
- Market share in B2C motorcycle/diesel engine oil: 8–9% in some areas
- Market share in industrial/passenger car: <5%
- Nayara fuel station reach: ~1,500 outlets (targeting 6,500+)
- Capacity expansion outlay: Rs. 55 crore (to 240mn litres by March 2027)
- Silvassa plant IGBC certification: Platinum
- Tirex revenue growth (Q1 FY26): 163% YoY
- AdBlue expected growth: 10–15% per year
- Industry growth: 3–3.5%
- Company volume growth: 11% (Q1 FY26)
- No price hike taken in Q1 FY26
- Advertisement spend (Q1 FY26): 3–4% of revenue
- Chennai facility expansion to be completed before Silvassa; full ramp-up by March 2027
- No specific numbers disclosed for data cooling product segment
All figures as stated in the call; if not disclosed, marked accordingly.