The Indian lubricants industry was valued at USD 7.19 billion in 2023 and is projected to grow at a CAGR of 4.4%, reaching USD 9.70 billion by 2030. This growth is driven by the expanding automotive sector and increasing industrial activities across the country, alongside advancements in lubricant technology.
With a market capitalization of Rs 20,860 crore, the shares of Castrol India Ltd were trading at Rs 210.9 per share, a decrease of around 1 percent compared to the previous closing price of Rs 213.86 apiece.
Financial Performance:-
Examine the company’s financial performance, revenue jumped by 9 percent from Rs 1,183 crore in Q1FY24 to Rs 1,288 crore in Q1FY25, during the same time frame net profit also jumped by 7 percent from Rs 194 crore to Rs 207 crore.
Brokerage Coverage:-
Motilal Oswal, one of the well-known brokerages in India, gave a ‘Buy’ call on the lubricant stock with a target price of Rs 275 apiece, indicating a potential upside of 33 percent from Thursday’s price of Rs 207.80 per share.
Here is the brokerage rationale for a bullish upside of 33%:-
● Castrol’s revenue grew 9% YoY in 3QCY24, reaching ₹13 billion, driven by an 8% YoY increase in volumes and an EBITDA margin of 22.2%. Management remains focused on brand building, expanding distribution, and launching new products to boost volume growth and market share.
● Management holds a bullish outlook on India’s lubricant demand, expecting it to remain robust until the late 2030s due to low car penetration. While EVs pose a long-term challenge, their adoption in India is anticipated to be gradual, supporting ongoing lubricant demand.
● Castrol aims for an EBITDA margin between 22-25% in CY24, projecting 22%/23%/24% in CY24/CY25/CY26. With a strong brand legacy, the company plans to maintain profitability through advanced products, a balanced product mix, and cost control, alongside increased annual capex.
● Castrol’s 3QCY24 revenue reached Rs 12.9 billion (+9% YoY, -8% QoQ), matching the estimated EBITDA of Rs 2.9 billion (+7% YoY, -11% QoQ) was slightly below projection, with a 22% margin. PAT was Rs 2.1 billion, affected by higher depreciation but balanced by lower finance costs.
● Furthermore, the company introduced four new rust-prevention products: Castrol Rustilo DW 800, 806, and 81, moreover during 3Q, the company trained and empowered over 8,000 truck drivers and more than 4,000 mechanics.
Company profile:-
Castrol India Limited is principally engaged in the business of manufacturing and marketing automotive and industrial lubricants and related services. Its geographical segments include India and Outside India.
Written by:- Abhishek Singh
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