Release Date: November 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 a strong quarter with a 9% volume growth, outperforming the market growth of 3% to 4%.
- The company achieved double-digit growth in the motorcycle category and agri channel retail segments.
- The B2B segment experienced high double-digit growth, contributing positively to the overall performance.
- A successful 360-degree marketing campaign, 'The Unstoppable', featuring prominent brand ambassadors, boosted brand visibility and consumer engagement.
- Exports have grown significantly, now contributing 6% to 7% of the total portfolio, up from previous quarters.
Negative Points
- There was a slight decline in AdBlue volumes due to seasonal impacts and overall consumption slowness.
- Increased A&P expenses due to the mega campaign 'The Unstoppable' impacted margins, with a 40-50 basis points elevation in costs.
- Higher inventory levels led to an increase in debt, attributed to pre-buying due to refinery shutdowns.
- The AdBlue realization per liter decreased from INR50 to INR45, affecting margins.
- The Tirex business, while growing, reported a loss in the second quarter, indicating ongoing challenges in achieving profitability.
Q & A Highlights
Q: Can you provide the volume numbers for the quarter?
A: The core lubricant volume was 37,000 kiloliters, and AdBlue volume was 29,000 kiloliters. - Manish Gangwal, CFO
Q: How should we view the growth in AdBlue and core lubricant volumes for the second half of the year?
A: AdBlue has grown significantly over the last two years, but this quarter was seasonally impacted. We expect stability with a minimum of 10,000 kiloliters per month and potential growth as new segments like construction equipment start using AdBlue. - Manish Gangwal, CFO
Q: Regarding the increased A&P costs for The Unstoppables campaign, will these costs persist throughout the year?
A: The A&P expenses are calibrated quarterly. This quarter was elevated due to the mega campaign, but we do not expect such high levels to continue. There might be some spillover into Q3. - Manish Gangwal, CFO
Q: What is the revenue from the battery segment this quarter?
A: The battery turnover was INR 20 crores for the quarter. - Manish Gangwal, CFO
Q: Can you discuss the base oil pricing trend and its impact on margins?
A: Base oil prices are linked to crude oil, which is volatile. If crude remains stable, we are comfortable maintaining our gross margins. However, short-term fluctuations make it difficult to predict margin improvements. - Manish Gangwal, CFO
Q: What is the current market share in diesel and personal mobility lubricants, and how do you plan to increase it?
A: We hold an 8-9% market share in diesel engine oils and motorcycle oils. We aim to grow by converting more consumers and leveraging our strong brand presence. - Ravi Chawla, CEO
Q: What are the future plans for the Tirex business, and when do you expect it to break even?
A: Tirex aims to double its turnover annually, targeting INR 500-700 crores in the next five years. We expect it to be EBITDA neutral or positive this year. - Manish Gangwal, CFO
Q: How do you see the dividend payout evolving in the future?
A: Our dividend payout has increased to 55-60% in recent years. While we don't have a fixed policy, we may increase it further if cash usage opportunities are limited. - Manish Gangwal, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
