GANDHAR - Gandhar Oil Refinery (India) Limited Share Price

During the Q4 FY '25 Earnings Call, management provided an optimistic outlook for the upcoming financial year. For FY '26, they project a volume increase of approximately 10% to 12%, and expect improvements in realizations from the current levels of Rs. 76,000 per KL. Management anticipated a stabilization of global supply chains, particularly noting that freight costs, which have been inflated due to disruptions like the Red Sea crisis, are expected to decline, thereby positively impacting margins.

Key points from the management's projections include:

• For FY '25, total revenue was reported at INR 38,969 million, with Q4 revenues at INR 9,617 million.
• The company recorded a consolidated EBITDA of INR 1,756 million for FY '25 and INR 336 million for Q4 FY '25.
• Profit after tax for FY '25 stood at INR 835 million, with Q4 at INR 123 million.
• Notably, management mentioned a gross margin improvement target, aiming for double-digit EBITDA margins in the future.
• A significant strategic initiative is the non-binding agreement for the Vadhavan Port Project, involving an investment of approximately Rs. 1,000 crores, designed to enhance logistics efficiency and supply chain capabilities.
• The project, projected to complete by FY '30, aims to substantially improve operational logistics with a focus on establishing a blending facility and terminal for storage.

Overall, the management expressed confidence in the strategic direction, adaptability to market dynamics, and potential growth in both domestic and international markets.

Major Questions and Answers from the Q&A Section of the Earnings Call

1. Viraj Mehta: "Can you explain how the gross profit increased this quarter despite raw material price corrections and detail on inventory losses in Q4?"

   Indrajit Bhattacharyya: "We have minimal inventory, so inventory losses are practically negligible. The increase in gross margin can be attributed to better procurement terms, despite the raw material price corrections."

2. Viraj Mehta: "Is the gross margin of 1,130 sustainable?"

   Aslesh Parekh: "We aim to increase our gross margin further. While I can't provide a specific forward-looking statement, our target is to improve margins beyond current levels."

3. Isha Murthy: "What is your outlook for Financial Year '26?"

   Indrajit Bhattacharyya: "We project a volume increase of about 10%-12%. We anticipate that realizations will improve from Rs. 76,000 per KL, aided by stabilizing global supply chains affecting freight costs."

4. Rajeev Roy: "What is the current utilization rate across manufacturing facilities, and do we foresee capacity constraints?"

   Indrajit Bhattacharyya: "No capacity constraints currently; our Taloja plant capacity was enhanced last year, and utilization has not peaked yet. We have ample capacity going forward."

5. Kevin Mehta: "Can you elaborate on the strategic rationale of the Rs. 1,000 crores MoU with JNPA for the Vadhavan port project?"

   Aslesh Parekh: "The MoU creates a foundation for a blending facility and storage terminal. It's early to determine specific benefits as the project is scheduled for completion by FY '30."

6. Moksh Ranka: "What factors contributed to the strong 19% year-on-year growth in standalone manufacturing volume?"

   Aslesh Parekh: "Our sales team effectively redirected the focus to domestic customers amidst global export disruptions, resulting in new customer additions and increased domestic sales."