Castrol India's operating revenue for Q4CY20 declined 7.6% YoY to | 935.2 crore. Volumes were at 52 million litre, down ~4% YoY. Gross margins dipped 1.2% YoY to | 106.8/litre due to lower realisation. Subsequently, EBITDA/ litre was at | 49.5/litre, down 21.6% YoY. EBITDA came in at | 257.6 crore, down 24.5% YoY. PAT was at | 187.7 crore, down 30.8% YoY. Lower realisation affect margins Volume to improve, albeit on lower base Castrol volumes in Q4CY20 dipped ~4% YoY to 52 million litre. On QoQ...

Castrol India reported a healthy set of Q3CY20 numbers. Operating revenue for Q3CY20 increased 4% YoY to | 883.1 crore. Volumes were at 47 million litre, up 6.3% YoY. Castrol witnessed an increase of 7.4% YoY in gross margins at | 113/litre due to lower base oil prices. Subsequently, EBITDA/litre was at | 61.3/litre, up 10.9% YoY. EBITDA came in at | 288.2...

Realization was at Rs 187.9/L. Revenue increased by 4% YoY and 80% QoQ owing to agri demand and partial revival of pent up demand. However, there was slow demand pick up in the industrial segment and volume recovery was mainly seen from CV and 2W space. Gross spreads improved by 7.2% on a YoY basis and by 30.2% on a sequential basis. CIL is taking pricing actions as and when required and will take necessary steps to keep cost in control. Cost per litre declined by 13.7% on a sequential basis and by 9.1% YoY. Gross margins...

Further, better product mix has aided the company in avoiding a steep decline in its gross margin/liter, which stood at INR86.8/liter (-14% YoY). Owing to the lower tax rate of 26.1% (v/s 35.6% in 1HCY19), PAT stood at INR1.9b (-48% YoY). Factoring in the same along with further imposition of the extended lockdowns in various states, we have revised down our volume estimate for CY20/CY21 to 143m/186m liter (from 153m/191m liter), resulting in EPS CSTRL has entered into a strategic alliance with Jio-BP fuel retail JV to exclusively sell its products at its 1,400 outlets (which should expand to 5,500 outlets over the next five years). However, 2W segment accounts for 30% of CSTRL total volumes, which may be hugely impacted by EVs. We expect high dividend payouts to continue. Oil drain intervals are expected to rise in the commercial segment for BSVI engines.

CSTRL has clocked growth in gross profits due to benefit from lower taxation, volumes de-growth of 4.5% was witnessed due to economic slowdown and flattish revenues were clocked in. Operating profit decline was marginal despite severe raw material headwinds due to unfavourable crude and forex trends. Favourable product-mix changes as well as appropriate pricing interventions have helped buoy the revenues. New product launches, moving into adjacencies and OEM tie up will further help in volume growth. CSTRL is ready with a range of BSVI products to cater to...

We lower our CY20 volume forecast due to likely weak volumes during Q2CY20 on the back of extended lockdown. Our CY20 sales/EBITDA/EPS estimates are lowered by 6.1%/7.9%/8.2%. We make minor changes to our CY21 forecasts. We value the stock at a PER of 18x CY21E EPS (earlier Rs17x) and derive a target price of Rs138 (previous Rs139). We maintain our BUY rating on the stock. Key Highlights and Investment Rationale Volumes fall sharply: Castrol's sales volumes fell 24.6% YoY to 38 mn ltrs due to weak demand from auto as well as due to lockdown in late March. Even realization at...

Castrol India's operating revenue for Q4CY19 declined 2.1% YoY to | 1011.8 crore. Volumes at 54 million litre remained flat YoY. The company witnessed an increase of 7.5% YoY in gross margins at | 108.1/litre due to a better product mix. Subsequently, EBITDA/litre was at | 63.2/litre, up 7.5% YoY. EBITDA came in at | 341.2 crore, up 7.5% YoY. The company shifted to a...

3 February 2020 Total volumes for CY19 were 4% lower YoY to 204m liters, while realization was 4% higher YoY to INR190/liter (highest ever). Gross margin was 11% higher YoY to 104.4/liter, led by reported record-high gross margins of INR108/liter (+7% YoY) in 4QCY19. The improvement in realization and gross margin for full-year CY19 was aided by improved product mix and robust cost control, led by process efficiencies and debottlenecking in 3QCY19. CSTRL has been increasing its dividend since the last three years and has recommended total dividend of INR5.5/share for CY19. At current levels, dividend yield remains attractive at ~3.7%, maintain 4QCY19 reported net sales were ~5% below estimate at INR10.1b (-2% YoY), owing to lower realization at INR187/liter (-3% est. -2% YoY). Sales volume came in line at 54m (flat YoY). However, EBITDA was 10% above est.

We cut our volumes/realization estimates for CY19/CY20 given weak demand from auto OEMs. Overall our net sales/EBTIDA stand lowered by 7%/12% for CY19 and 5%/8% for CY20, respectively. We cut our target multiple from 24x to 20x as we now expect EPS to grow at a CAGR of only 6% over CY18-20E. Nevertheless, Castrol is currently trading at an attractive valuation (PE of 15.6x CY20E). Our revised target price...

Castrol India reported its Q2CY19 numbers, which were below our estimates mainly on account of lower-than-expected volumes, which fell 2.8% YoY to 55.4 million litre, below our estimate of 56.6 million litre. Revenues increased 2.2% YoY to | 1039.4 crore, below our estimate of | 1104 crore due to lowerthan-expected realisations. Castrol witnessed increase of 15% YoY in gross margins at | 101.1/litre (our estimate - | 100/litre) due to better product mix. On account of higher other expenses, EBITDA/litre came in at | 51.3/litre (up 16.2% YoY), below our estimate of | 55.4/litre. Hence, PAT was at | 182.7...

Volumes suffer; preparing for the uncertain times ahead Net sales increased 2% YoY to INR10.4b (~7% miss) in 2QCY19. EBITDA was up 13% YoY at INR2.8b, while PAT grew 11% YoY (-1% QoQ) to INR1.8b (12% miss). Total expenditure of INR7.5b was flat YoY but increased 9% QoQ due to spending...

CSTRL's Q2CY19 volumes were in line with our estimates at 55.4 TKL. Revenue increased 2.2% YoY and by 6.5% QoQ, due to growth in the personal mobility segment, focus on channels, and new premium products. Gross spreads declined by 2% on a sequential basis. We expect spreads to remain stable/expand going forward, as CIL has already hiked prices in Q1CY19. CIL has been continuously working on protecting margins with sustainable growth. Management expects H2CY19 to boost volumes and they maintain they guidance between 2%-4%. Volume growth with spreads...

Castrol India limited is one of the leading automotive and industrial lubricant manufacturing and marketing companies in India. The company has a proud heritage of innovation and success since over 100 years in the country. Castrol India is a public limited company with 51% share held by BP through its wholly subsidiary,...

Volumes lower than estimates, Higher realizations negate increase in input cost; Maintain Accumulate CSTRL's Q1CY19 volumes were marginally below our estimates at 50.4 TKL. Revenue increased 5% YoY and decreased by 5.5% QoQ, due to growth in the personal mobility segment, focus on channels, and new premium products. Gross spreads rose by 2% on a sequential basis. We expect spreads to remain stable/expand going forward, as CIL has already hiked prices in Q1CY19. CSTRL's management is pessimistic about its...

Outlook and Valuation: Castrol has managed to recover its EBITDA margin to over 29.0% in last two quarters after falling to mid-20s during CY18 indicating its brand power. While its volume de-grew by 2.1% YoY in Q1CY19; it was better than industry performance. Castrol is currently trading at attractive valuations (PE of 17.7x CY20E). Further, dividend yield at 4.4% on our CY19E remains attractive. We continue to value Castrol at 24.0x on its CY20E EPS to derive a target price of Rs198 (previous...

Margins remain healthy on account of better product mix Castrol's raw material cost (base oil) are dependent on the movement of crude oil prices and rupee against US dollar. During the past few months, the company took two price hikes, which led to an increase in net realisations to | 193.7 crore vs. | 180 per litre YoY. As a result, gross margins increased and came in at | 101.5/litre. However, the recent upward trajectory in crude oil prices will escalate raw material costs. On account of the same and relatively weak product mix, we expect gross margins at | 100.6 per litre...

We have been interacting with lubricants experts to cognize the future trends and prospects of the lubricants industry. The ride ahead for players is likely to remain tough owing to intensifying competition and the challenges in oiling the growth wheel over the longer term. We revise our CY20E P/E multiple for CSTRL from 35x to 30x, factoring in the aforementioned challenges.

Subdued Growth To Continue: Castrol reported sales volume of 54 Mn Lt during Q4CY18 led by higher demandfrom the retail segment. Total volume for the year 2018 came in at 214 Mn Lt which is higher by 4.5% YoY out of which 80% growth came from new product launches.

ICICI Securities Ltd | Retail Equity Research Castrol India reported its Q4CY18 numbers, which were above our estimates on the profit front. Revenues increased 6.5% YoY to | 1033.4 crore in line with our estimates. Volumes fell marginally by 0.7% YoY to 54 million litre below our estimates of 56.3 million litre However, the quarter witnessed an increase of 0.7% YoY in gross margins at | 98.4/litre, above our estimate of | 89.9/litre mainly due to a better product mix. Due to the same and lower other expenses,...