Gandhar Oil Refinery India IPO Review: Gandhar Oil Refinery India Limited presents its Initial Public Offering. The IPO will open for subscription on November 22, 2023 and close on November 24, 2023. In this article, we will look at the Gandhar Oil Refinery IPO Review 2023 and analyze its strengths and weaknesses. Keep reading to find out!
Gandhar Oil Refinery IPO Review – About The Company
Gandhar Oil Refinery India is the leading producer of white oils by revenue with a growing focus on the consumer and healthcare industries.
As of June 2022, the company offers a comprehensive range of more than 350 products, which mainly fall under three categories – personal care, lubricants, treatment and performance oils (PHPO), and process and insulation oils (PIO) – under the brand name “Divyol”.
The company’s products are used by top Indian and global companies as crucial ingredients for various end products in areas such as consumer goods, healthcare, automotive, industrial, power, tires, and rubber.
As of June 2022, the company served 100 nations worldwide. Procter & Gamble (“P&G”), Unilever, Marico, Dabur, Encube, Patanjali Ayurved, Bajaj Consumer Care, Emami, and Amrutanjan Healthcare were among the more than 3500 clients settled by the company.
Gandhar Oil Refinery IPO Review – Industry Overview
According to estimates, the global specialty oil market, which was valued at USD 125.99 billion in 2022, is projected to grow at a CAGR of 3.4% and will reach USD 148.7 billion by 2027. Similarly, the Indian specialty oil market is projected to up from $7.0 billion. in 2022 to $8.85 billion by 2027, registering a CAGR of 4.7%.
The white oil segment, which is the fastest growing category in the Indian specialty oil market, is expected to be worth $0.43 billion in 2022 and will reach $0.69 billion by 2027, growing at a CAGR of 9.8%. The volume of this segment is expected to reach 1,128 KT by 2027 from 718 KT in 2022, registering a CAGR of 9.5%. Personal care and cosmetics are among the fastest growing categories in this segment.
The white oil market is expected to be driven by increased demand for cosmetics and better living standards. The pharmaceutical industry is also expanding. The main drivers of the Indian pharmaceutical market are government efforts such as the PLI plan, expertise in cheap generic patented drugs, quality service at a low cost compared to the US, Europe and others, and strong domestic demand.
Gandhar Oil Refinery IPO Review – Financial Highlights
If we look at the financials of Gandhar Oil Refinery, we can find out that its revenue has grown from ₹ 1512.74 crore in March 2020 to ₹ 3389.07 crore in March 2022. Its profits have grown from ₹ 47.23 crore in March 2020 to ₹ 14 ₹ 18 crore in March 2022. March 2022.
This increase in revenue and net profit numbers is accompanied by an improvement in net profit margins from 3.11% in FY20 to 5.42% in FY22.
Coming to the return ratios, we can see that it has an exceptional ROE of 39.36% and RoCE of 46.99% as of FY23. This indicates an exceptional return on the capital invested by the shareholders and an optimal use of company resources.
In FY23, the company reported a revenue of ₹ 8,839.37 crore and a net profit of ₹ 65.01 crore. This gives it a net profit margin of 7.34%.
Financial Metrics
Competitors
The following chart shows the comparison of Gandhar Oil Refinery along with its listed peers:
Strengths of the Company
- The company is one of the largest producers of white oils by revenue domestically and abroad in FY22. It was also one of the top five players worldwide by market share in 2021.
- The company has established long-term relationships with a number of major consumers and pharmaceutical manufacturers with its ability to offer customized products. In FY22, it served 3529 Indian and global customers
- The company has strategically set up three manufacturing facilities, 2 located in western India and one located in UEA which helps it cater to its Indian and global operations.
- The nature of the industry as well as the strict quality standards applicable to various products in the end industries that the company serves. This makes it difficult for new entrants to replicate our quality, scale and business operations.
- The company is managed by a skilled and experienced management team with experience and knowledge of the specialty oils sector, including management, marketing and human resource management.
Weaknesses of the Company
- The company conducts a significant part of its business primarily in USD or in several other currencies. Thus, it is exposed to exchange rate fluctuations that can negatively affect its business.
- The company receives a significant portion of its revenue from a limited number of suppliers. Since the company does not have long-term contracts with its suppliers, an interruption in the supply of raw materials by any of its suppliers can significantly affect its business.
- The company requires huge working capital to run its operations. An interruption of such cash flow can significantly affect the operations of the business
- The company does not have long-term agreements with its customers. Loss of any of its customers or reduction of the order by them may significantly affect its business.
- The company depends on it to transport its raw materials and final products. Any disruption caused in the supply may adversely affect its business.
IPO Review of Gandhar Oil Refinery – GMP
Gandhar Oil Refinery India shares traded at a premium of 29.59% in the gray market on November 17, 2023. The stock trailed at Rs 219. This gives it a premium of Rs 50 per share over the limit price of Rs 169.
Gandhar Oil Refinery IPO Review – Key IPO Information
Advertisers: Mr. Ramesh Babulal Parekh, Mr. Samir Ramesh Parekh and Mr. Aslesh Ramesh Parekh
Senior Book Manager: Edelweiss Financial Services Limited and ICICI Securities Limited
Registrar to the Offer: Link Intime India Private Limited
The Purpose of the Subject
The net proceeds of this issue will be used for the following purposes:
1) Loan investment in Texol to finance the repayment/advance of a loan facility obtained by Texol from the Bank of Baroda.
2) Capital expenditures through the purchase of equipment and civil work necessary for:
- Expansion in the capacity of motor oil at Silvassa Plant
- Expansion in the capacity of petroleum jelly and accompanying cosmetic product division at Taloja Plant;
- Expansion in the capacity of white oils by installing blending tanks at Taloja Plant
3) Financing a company’s working capital requirements
In Closing
In this article, we have examined the details of the Gandhar Oil Refinery India IPO Review 2023. Considering the difficulty of the industry for new players along with the strong foothold of the company, its outlook seems favorable for the future.
What do you think the future holds for the company? Are you applying for the IPO? Let us know in the comments below.
Written by Aaron Vas
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