Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Gulf Oil Lubricants India Ltd (BOM:538567, Financial) reported its highest-ever quarterly revenue, EBITDA, and profitability.
- The company achieved a 5.7% year-on-year growth in core volumes for Q1 FY25.
- Significant growth in the B2C channel, with passenger car oils and agriculture segments showing high single-digit and double-digit growth respectively.
- Double-digit volume growth in the industrial B2B segment despite sectoral pressures.
- Recognition as the ESG champion of India '24 under the oil and gas sector and receiving a gold award from esteemed OEMs like Ashok Leyland and Swaraj Motors.
Negative Points
- The factory fill segment saw a decline of around 10-11% due to reduced production by some OEMs.
- Challenges in the retail and infrastructure segments due to the election year and heat waves.
- Depreciation saw a one-off increase in the March quarter due to accelerated depreciation on the filling line.
- EBITDA margin for the quarter was 13.1%, slightly lower than the 13.5% in Q3 and Q4.
- The company's investments in the EV sector, particularly in Tirex Transmission, are still in the nascent stage and not yet profitable.
Q & A Highlights
Q: Can you share the volume breakup for lubricants and AdBlue? Also, why did depreciation go down this quarter, and can you explain the EBITDA margin changes?
A: The core lubricant volume for the quarter was 37,000 kl, translating to a 5.7% YoY growth. AdBlue volume was 38,000 kl, a 26% YoY growth. Depreciation decreased due to a one-off accelerated depreciation in the previous quarter. The EBITDA margin was impacted by increased brand investments and freight costs, but we remain within our 12%-14% guidance range.
Q: What was the brand expenditure during the quarter, and how much was the royalty paid?
A: Advertisement expenses were around 3%-4% of the top line. Specific details on OEM royalties are not disclosed but are included in other expenses.
Q: Can you explain the difference between standalone and consolidated PBT, and when do you expect the EV subsidiaries to generate positive growth?
A: The difference is due to our investment in Tirex Transmission, which is still ramping up. We aim for these businesses to be EBITDA-neutral or positive this year, but it's too early to predict exact timelines.
Q: How do you see the volume growth in the OEM and retail segments over the next nine months?
A: The OEM sector, particularly commercial vehicles, will have cyclical variations but is expected to grow positively. The lubricant industry is projected to grow 3%-4% annually, and we aim to grow 2-3 times that rate.
Q: What is the opportunity in the data center cooling solutions market?
A: The data center cooling market is small but growing. If all data centers convert to liquid cooling, it would still be less than 1% of the total lubricant market in India. We are developing products for this niche market.
Q: Can you provide details on the AdBlue segment's revenue and operating profit contribution?
A: AdBlue is a high-volume, low-margin product, contributing significantly to our revenue. It is essential for BS-VI diesel vehicles and complements our lubricant product line.
Q: Have you taken any price increases in the first quarter or after June?
A: We took a small price increase in retail in mid-May. The impact will be seen gradually, and if crude prices remain stable, we may adjust schemes accordingly.
Q: What are the future growth plans for EV fluids?
A: EV fluids are a small segment currently, but we are working with several OEMs. As the EV market grows, we expect this segment to become more significant.
Q: What is the current volume breakup between personal mobility, industrial, and other automotive segments?
A: The mix remains similar to previous quarters, with personal mobility and diesel engine oils performing well. We continue to see opportunities for market share growth in various segments.
Q: What is the CapEx plan for FY25 and FY26?
A: We have guided for an annual CapEx of around INR 25 crores, mainly for filling lines and storage augmentation. We have sufficient blending capacity for the next 2-3 years.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
