GULFOILLUB - Gulf Oil Lubricants India Limited Share Price

The management outlook for Gulf Oil Lubricants India Limited is positive, highlighting a record performance in the first quarter of FY26. Key points include achieving their highest quarterly volume, revenue, and EBITDA, with a remarkable double-digit growth of 11% in core lubricant volume, reaching 41,000 KL, and an additional 38,000 KL from AdBlue. The total consolidated revenue for the quarter crossed Rs. 1,000 crore for the first time.

The EBITDA margin was reported at 12.7%, within the management's target range of 12-14%. The company plans to maintain a growth trajectory that is 2-3 times the industry's growth rate of approximately 3-3.5%. Major initiatives driving this growth include successful brand campaigns, particularly in the motorcycle oil segment, and expansion into OEM markets, where there was double-digit growth.

Furthermore, management announced a capacity expansion plan to increase the production capacity from 140 million to 240 million, with an investment of Rs. 55 crore. This expansion aims to support their anticipated growth in various segments, including their relatively nascent EV charger subsidiary, Tirex, which achieved a 163% growth in revenue.

The company also remains net debt-free with a cash balance exceeding Rs. 1,000 crore and has declared a final dividend of Rs. 28 per share. Looking ahead, while the monsoon quarter historically sees lower demand, the company is committed to sustaining growth through enhanced distribution strategies and a focus on less penetrated segments such as industrial and passenger car lubricants. The overall sentiment is one of confidence in maintaining growth momentum across all business areas, with continued investment in branding and sustainability initiatives.

Q1: Capacity Expansion Impact on Product Mix
Question: "This capacity expansion what we are looking for, is there any shift going to happen in product mix or more or less will be the same kind of product mix that we will be having after say, when the capacity expansion is complete?"
Answer: "Yes, while we maintain flexibility in our product mix in response to growth, the expansion is aligned with our current offerings. We primarily make our products in-house, which allows for adjustments. Our focus will remain on segment-specific products, and we'll accommodate both small and large packs without challenges in the shift of packaging."

Q2: Tirex EBITDA Margin Fluctuations
Question: "On Tirex, how do we read the lumpiness in EBITDA margin that we are seeing over the past 5-6 quarters? And how do you guide on the EBITDA margin going forward?"
Answer: "Tirex is a nascent business with variable revenue contributions from different products. This quarter, we achieved EBITDA positivity, growing revenues by 163%. Our long-term goal is for Tirex to align with our lubricant business margins, but near-term fluctuations are expected as we scale."

Q3: CNG Product Strategies
Question: "For CNG penetration in passenger vehicles, what are we doing for tie-ups with these vehicles?"
Answer: "We have a range of products for CNG vehicles but approach this segment selectively due to its price orientation. We do offer specialized oils for CNG buses with extended drain intervals, primarily focusing on premium offerings where it's strategic."

Q4: Tirex Revenue Contribution
Question: "How much does EV now contribute to our revenue? Are we planning for it to become a major revenue pillar?"
Answer: "Tirex's quarterly revenue is now nearly Rs. 25 crore, and we aim for it to grow significantly in the next 4-5 years to become a key revenue stream. As we continue to expand, competition is rising, but we believe our strong product portfolio will sustain growth."

Q5: Nayara Tie-up and Impact
Question: "Regarding our tie-up with Nayara, has it started to affect our volume?"
Answer: "It's still early days. Currently, we are reaching around 1,500 Nayara outlets, and while there's potential, we have to nurture this partnership to realize its full benefits. We're confident in its future contributions to our volume."

Q6: AdBlue Sales Growth
Question: "AdBlue saw flattish growth this quarter; how do you see it moving forward?"
Answer: "We anticipate 10%-15% growth in AdBlue going forward. The flat growth this quarter was due to the absence of promotional schemes that were present last year, but our long-term trajectory remains strong."

Q7: Brand Growth Strategy
Question: "Given the recent market consolidations, any acquisition plans for Gulf Oil?"
Answer: "We continuously evaluate potential segments for strategic partnerships, mainly in niche industrial products. However, there are currently no acquisitions on the horizon that we can announce."

Q8: Rural Market Penetration
Question: "How much of the rural markets have we penetrated?"
Answer: "We have been growing our distribution through Gulf Rural Stockists and automotive distributors for years. We consistently achieve double-digit growth in rural areas, focusing on agri and motorcycle segments, and see great potential for continued expansion."

Q9: CAPEX and Capacity Ramp-up
Question: "When will our CAPEX from the expansion become operational?"
Answer: "We expect to complete the expansion in about 18 months in phases, with the Chennai facility going online sooner than Silvassa. By March 27, we should fully utilize the enhanced capacity of 240 million."

Q10: Future EBITDA Margins
Question: "When can we expect EBITDA margins in the EV business to rise?"
Answer: "As the EV business is new, we are currently incurring costs for branding and infrastructure. However, we aim for revenues to catch up within 3-4 years, aligning EBITDA margins closer to our lubricant business."