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Mix Advantage Offsets Weak Brent and Currency Drag in Q3 FY26

* In Q3 FY26, a ~10% y/y drop in Brent was followed by 5% decrease in base oil price along with 5% depreciation in currency. As a result, there was no macroeconomic tailwind for the firms.

* GOLI has been able to increase revenue at a pace greater than its volumes, attributing to its ability to improve product mix among the 15 segments that company operates coupled with favourable pricing environment.

Asia Base Oils: Heavy Grades Slump, Lights Hold Ground

In January and February 2026, the Group II base oil market in Asia was defined by persistent imbalance where heavy grades remained under significant price pressure due to oversupply, while light grades were comparatively steady: • Heavy Grades (500N): Supplies were more than adequate throughout the period, while demand remained muted. • Light Grades (70N/150N): These grades attracted more interest due to seasonal factors, as lighter viscosities are required for cold winter months. By February, supplies for light grades began to tighten. For Base Oil III, the market conditions have remained largely balanced throughout January. Overall, the Group III 500N, heaviest grade has been down 17% yoy during first seven weeks of 2026. Meanwhile, Group III 4cst (lightest grade) has been up 6% yoy. We expect minimal tailwind from base oil prices for lubricants players in January–March 2026 quarter, provided the current market conditions prevail.

Import Relief to Spur Transformer Oil Uptick

Transformer oil demand has been impacted by delays in transformer deliveries. These delays stem from a lack of supply and capacity of bushings, resulting in stalled substation and transmission line work. The government is making concessions to allow import of bushings, which is expected to accelerate the execution of transformer orders and drive demand for oil in the next few months. White Oil market is expected to grow at low single digit CAGR, going forward.

Volume growth coupled with rise in average realised price

As part of our initiation report, we had identified four levers of competitive advantage for the lubricants industry, which are: (a) Pricing strength, (b) Branding (c) Supplier cost pressure and (d) Upcoming environmental regulations. In Q3FY26, GOLI has been able to grow volumes at 8%, while its revenue grew at 10%, implying growth in average realised prices. Meanwhile, its closest competitor observed an increase in revenues of 6%, while growing volumes at only 8% on a comparable base. Overall, the price of crude oil is down 10% y-oy, on the back of which, base oil prices corrected by just 5% yet. Simultaneously, rupee depreciated by 5%, eroding gains from lower base oil prices. According to our view, GOLI has a proven track record of identifying pockets of growth across 15 segments which it operates in. It is backed by an agile plant and strong marketing team, which results in a consistent ROE of >20%.

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