Gandhar Oil Refinery India IPO is set to open on November 22. and plans to raise Rs 500.69 crore through a fresh issue of 1.78 crore shares and an offer-for-sale of 1.17 crore shares. Gandhar Oil Refinery is a leading manufacturer of white oils with a growing focus on the consumer and healthcare end industries.
IPO opens
November 22, 2023
IPO Closes
Nov 24, 2023
IPO Size (Rs.)
₹500.69 Cr
IPO Size (shares)
29,626,732 shares
Breakup
Fresh issue₹302.00 Cr + OFS ₹198.69 Cr
Face Value:
₹ 2/-
IPO Price in Rs :
₹160 to ₹169
Minimum Lot
88 Shares
Listing At
NSE , BSE
Anchor & QIB Quota
50%
NII Quota
15%
Retail Quota
35%
Lead Manager
Nuvama Wealth , ICICI Securities
Registrar
Link Intime
About Gandhar Oil Refinery India Limited:
Gandhar Oil RefineryLimited was incorporated on October 7,
Company is a leading manufacturer of white oils by revenue.
It has focus on the consumer and healthcare end-industries.
As of June 30, 2023, their product suite comprised over 440 products primarily across the personal care, healthcare and performance oils , lubricants and process and insulating oils divisions under the “Divyol” brand.
Their 3 main business divisions are:
Personal care,
healthcare and performance oils
Lubricants; Process and insulating oils
They sell their automotive oil products through a domestic distribution network that comprises 282 distributors and 27 depots, of which 4 are operated by the company.
Gandhar is India’s largest manufacturer of white oils by revenue in FY2023, including domestic and overseas sales and is one of the Top-5 players globally.
As of June 30, 2023, they employed a total of 444 full-time employees.
As of June 30, 2023, the contractual workforce at at its Taloja Plant and Silvassa Plant were 199 and 172, respectively.
Financials: Gandhar Oil Refinery India Limited
Revenue from Operations
1,070.34
4,079.44
3,543.37
2,221.00
Revenue Growth (%)
–
15.13%
59.54%
–
EBITDA
84.06
316.62
245.97
138.77
EBITDA Margin (%)
7.85%
7.76%
6.94%
6.25%
Profit before Tax
67.14
270.95
225.23
120.28
Net Profit
54.28
213.18
163.58
100.32
Net Profit Margin (%)
5.07%
5.20%
4.58%
4.47%
Share Capital
16.00
16.00
16.00
16.00
Reserves
753.79
709.30
525.12
428.83
Net Worth
810.79
760.21
560.71
444.83
EPS – Basic & Diluted (₹)
5.60
23.77
18.42
12.54
RONW (%) as stated
6.91%
32.28%
32.54%
24.77%
Net Asset Value (₹)
101.35
95.03
70.09
55.60
Post issue Share Capital
19.57
FV
2.0
IPO price
169.0
EPS Fy23
21.8
PE Fy23
7.8
EPS Fy24 (annualized)
22.2
PE Fy24 (annualized)
7.6
Market cap in Lacs
1,654.0
Market cap / Sales
0.41
Anchor: Gandhar Oil Refinery India IPO
Gandhar Oil Refinery India IPO: Salient Points
Gandhar Oil Refinery India dropped IPO plans in 2017.
Those offering shares in the OFS include promoters — Ramesh Babulal Parekh, Kailash Parekh and Gulab Parekh — and other shareholders — Fleet Line Shipping Services LLC, Denver Bldg Mat & Decor TR LLC and Green Desert Real Estate Brokers.
Gandhar Oil is amongst the most well-diversified players in the speciality oils and lubricants. The oils are marketed under the brand name ‘Divyol’.
The primary end industries for its three main business divisions are as follows:
S. No.
Business division
Primary end industries
1.
Personal care, healthcare and performance oils (PHPO)
Consumer; healthcare; plastics; chemical; textiles; and fragrance
2.
Lubricants
Automobile; and industrial machines and equipment
3.
Process and insulating oils (PIO)
Transformer manufacturers; power generation and distribution; and tyre and rubber product manufacturers
Gandhar Oil Refinery has created a niche place for white oil and is among the top 5 players with renowned customers like HUL, P & G, Emami, Marico, Dabur, etc.
The white oil market is the fastest growing segment in the specialty oils sector and Gandhar is India’s largest manufacturer of white oils by revenue in FY2023, including domestic and overseas sales and is one of the Top-5 players globally.
As of June 30, 2023, its products were sold in over 100 countries globally. The exports are particularly focused on the Asia-Pacific region and North America. The % exports including those from its UAE subsidiary were:
Quarter ended June 30, 2023
Financial Year 2023
Financial Year 2022
Financial Year 2021
Amount (in ₹ million)
6,905.58
21,733.50
13,456.64
7,413.61
Exports as % consolidated revenue
64.57%
53.32%
39.76%
36.00%
They intend to utilize an aggregate of ₹277.29 million of the Net Proceeds towards capital expenditure for the expansion of the Silvassa Plant through the addition of an automotive oil unit.
They are also in the process of enhancing the production capacity of Taloja Plant by an aggregate of 100,000 kL, out of which, we commissioned an incremental capacity of 25,000 kL in October 2022. This enhancement of capacity is proposed to be funded out of our internal accruals and through external borrowings obtained by our Company. We expect to complete the enhancement to our production capacity at Taloja during the Financial Year 2024. Further, we may also incur capital expenditure for a separate proposed expansion of our Taloja Plant for the addition of blending tanks, a petroleum jelly unit and an accompanying cosmetics product division unit
Funds will be utilised for expansion in capacity of petroleum jelly and accompanying cosmetic product division at the company’s Taloja plant as well as expansion in capacity of white oils by installing blending tanks at the plant and funding working capital requirement.
a major component of our raw material is base oil, which is derived from vacuum gas oil, which is in turn a by-product of crude oil. We source a majority of our base oil from suppliers in South Korea and the Gulf Co-operation Council region (“GCC Region”), with whom we typically have annual contracts for the supply of certain minimum volumes of such raw materials. We source our remaining base oil and other raw material from Indian oil refining companies.
Raw material cost forms 83% of its consolidated revenues and about 73% of the raw material is imported.
They have also received a long-term credit rating of ACUITE A in respect of our ₹1,000 million outstanding bank loan facilities and a short-term credit rating of ACUITE A1 in respect of our ₹9,000 million outstanding bank loan facilities, issued by ACUITE on March 11, 2022 and reaffirmed on June 1, 2023.
Company’s focus is on personal care, health care and performance oil (PHPO) division which presently contributes 55% of its revenues. Within the PHPO division, the consumer and healthcare end-industries contributed about 40% of the consolidated revenue from finished goods sold. The finished goods sold have seen an improvement from 29% to 40% over the 3 years.
Gandhar Oil Refinery India has reported significant growth in revenues at CAGR of 40.5% over the past three years and has significantly expanded its operations.
Peers: Listed peers shown in RHP are not strictly comparable and are detailed below:
Savita Oil ( PE 13.7x) : Company is a specialty petroleum products company engaged in manufacturing Transformer Oils, White Oils etc.
Apar Ind. with PE of 28.3 has business divisions engaged in business segments, which are Conductors, Transformer and specialty oils (TSO), and Power/telecom Cables.
Panama Petro with PE of 9.55x is into liquid paraffin oils, petroleum jelly, ink oils, antistatic coning oil, rubber process oils, transformer oils, cable filling compounds, and paraffin wax.
Galaxy Surfactants with PE of 28.8 x makes Performance Surfactants and Specialty Care Products which includes varieties of products which find use in hair care, oral care, home care, skin care, cosmetics and toiletries.
Privi Speciality with PE of 227x is in the manufacturing, supply and exports of aroma and fragrance chemicals used in soaps, detergents, shampoos, and other fine fragrances.
Rossari Bio with PE of 34.x has Their 3 main product categories: – Home, personal care, and performance chemicals – Textile specialty chemical – Animal health and nutrition
Fairchem Organics with PE of 52.6x is in manufacturing of specialty chemicals like dimer acid, linoleic acid, mixed tocopherol concentrate and sterols concentrate with application in industries like nutraceuticals, paints, printing ink, detergents, adhesives, etc.
Particulars / Rs.
EBITDA
EBITDA margin
PAT
PAT margin
RoE
RoCE
Units
(₹ million)
(%)
(₹ million)
(%)
(%)
(%)
Gandhar Oil Refinery (India)
3,166.19
7.76%
2,131.75
5.20%
32.28%
41.19%
Savita Oil Technologies Limited
3,345.87
9.22%
2,256.97
6.18%
16.68%
23.02%
Apar Industries Limited
12,269.30
8.55%
6,377.20
4.43%
32.28%
49.57%
Panama Petrochem Limited
3,089.70
13.74%
2,329.70
10.33%
27.08%
34.42%
Galaxy Surfactants Limited
5,682.80
12.78%
3,809.80
8.55%
22.04%
25.59%
Privi Speciality Chemicals Limited
1,859.21
11.56%
212.78
1.31%
2.57%
6.10%
Rossari Biotech Limited
2,230.24
13.47%
1,072.57
6.46%
12.47%
16.15%
Fairchem Organics Limited
723.31
11.16%
435.02
6.71%
17.70%
24.11%
Gandhar Oil Refinery India IPO is coming at a PE ratio of 7.8 (FY23) and 7.6x (FY24 annualized on Q1FY24 results).
I intend to apply in Gandhar Oil Refinery India IPO. he company’s products serve as crucial ingredients for various end products for consumer goods, healthcare, automotive, industrial, power, rubber etc. and are used by leading Indian and global companies. Valuations too seem reasonable.
GMP as reported on social media is around Rs. 76.
All equity investments carry good degree of risk. Please do your own diligence and do not be swayed by my view.
Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational/exploratory purpose only. Iam a postgraduate in engineering & Management . Also in past I cleared some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Do check the data from company’s RHP and exchanges before making any decision. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.
