GULFOILLUB - Gulf Oil Lubricants India Limited Share Price

Management Outlook:
Gulf Oil Lubricants India Limited's management remains optimistic, emphasizing resilience amid macroeconomic challenges (elections, demand slowdown) and early signs of demand recovery. Key focus areas include sustaining 2-3x market growth (vs. industry's ~3% volume growth), maintaining EBITDA margins in the 12-14% range, and premiumization across product lines. Strategic initiatives aim to capitalize on infrastructure spending, rural demand revival, and EV opportunities. The company anticipates stable input costs (crude ~$75-$80) but remains cautious about rupee volatility.

Major Highlights:

1. Record Financials: Achieved highest-ever quarterly revenue (Rs.900+ crore) and EBITDA (Rs.122 crore), with 7% YoY core lubricant volume growth (38,500 kl).
2. Segment Growth:
   • Motorcycle Oils: Double-digit growth driven by premium products (e.g., synthetic oils).
   • B2B/Industrial: Strong infra/industrial demand.
   • AdBlue: Recovered to 36,000 kl in Q3; expansion via Nayara's 6,000 outlets.
3. Strategic Partnerships:
   • Renewed exclusivity with Piaggio (2W/Commercial Vehicles till 2032/2030).
   • Nayara Collaboration: Leveraging retail network for lubricants/AdBlue distribution.
4. Brand & Marketing:
   • "The Unstoppables" campaign boosted brand engagement.
   • Title sponsorship of India Bike Week (premium biking segment focus).
5. Subsidiaries:
   • Tirex (EV chargers): Revenue surged 3x YoY (9M: Rs.40 crore); targets doubling annually.
   • ElectreeFi (SaaS): Secured new EV ecosystem clients.
6. Margins & Costs: Gross margin improved via product mix; forex losses (Rs.5 crore in Q3) managed via pricing/scheme adjustments. Net cash position at Rs.450+ crore.
7. Future Initiatives:
   • EV fluids partnerships (10+ OEMs) and immersion cooling solutions for data centers (early-stage).
   • Capex ~Rs.30-40 crore/year for capacity expansion (Silvassa/Chennai plants).

Focus Areas: Premiumization, operational efficiency, and EV infrastructure growth (Tirex/ElectreeFi) to drive long-term value.

Question 1:
"I have a couple of questions. Firstly, as far as the margin improvement is concerned, given the way that crude has behaved where it probably strengthened a bit towards the end of the quarter, but after that has once again softened back and now is at some $75 level. How should we be looking at the margin trend? Of course, as you rightly mentioned, this is offset a bit by the rupee depreciation, which has been a significant drag, but on the whole, are we confident that we can maintain this trajectory of improvement that we have seen in the last quarter over the next couple of quarters?"

Answer Summary:
Management expects stable input costs if crude remains within the $75"“$80 range, though rupee depreciation impacts landed costs. Margin management actions, including pricing adjustments and scheme rationalization, will be taken to maintain the guided EBITDA margin band of 12%"“14%.

Question 2:
"Could you kindly provide those numbers [core lubricant and AdBlue volumes]?"

Answer Summary:
Core lubricant volume for Q3 was 38,500 kiloliters (kl), a 7% YoY growth. AdBlue volume stood at 36,000 kl, showing recovery after a subdued Q2.

Question 3:
"Any guidance you would venture to give us for what target is there for FY 2026 [for Tirex]? And in order to support this level of growth, does that require a little bit more investment?"

Answer Summary:
Tirex (51% subsidiary) aims to double revenues annually, with FY2025 expected to exceed double last year's turnover. Existing capacity and prior funding (INR 65 crore) suffice for near-term growth; no immediate capital infusion from Gulf Oil is planned.

Question 4:
"How has the different segments performed in terms of growth during YoY?"

Answer Summary:
Motorcycle oils and B2B/industrial segments drove growth with double-digit performance. Agri was subdued. Diesel Engine Oil (DEO) saw mid-single-digit growth, with factory fill improving post-December.

Question 5:
"On AdBlue...can there be any improvement [in margins] just because of the fact that the volumes have almost become as big as lubricants itself?"

Answer Summary:
AdBlue margins are expected to remain competitive due to price sensitivity. Expansion via Nayara's 6,000 outlets could enhance distribution but won't significantly alter margin dynamics.

Question 6:
"Any update you'd like to share on the EV fluid segment?"

Answer Summary:
EV fluids remain a niche segment with small volumes. Gulf Oil has 10+ partnerships and aims to be a top-three supplier as EV adoption grows.

Question 7:
"Have you taken any price hikes in this financial year?"

Answer Summary:
A 2% price hike occurred in Q1. No further hikes were taken due to stable base oil costs. Future adjustments depend on rupee volatility and input cost trends.

Question 8:
"What is the amount of battery turnover in this quarter?"

Answer Summary:
The battery segment revenue was INR 21 crore for Q3, achieving EBITDA positivity for the first time in FY2025.

Question 9:
"How do you see the overall trajectory of AdBlue for the next 2"“3 years?"

Answer Summary:
AdBlue volumes are projected to grow 10%"“15% annually. Partnerships like Nayara's network expansion and OEM tie-ups will bolster market penetration.

Question 10:
"What is the typical module of addition [for Silvassa plant expansion]?"

Answer Summary:
Current blending capacity is 90,000 kl in Silvassa and 50,000 kl in Chennai. Expansion plans are under discussion, with capex likely in the INR 30"“40 crore range annually. Existing infrastructure supports near-term growth via shift adjustments.