Castrol India Q2 Results Review - Performance Inline With Expectations: IDBI Capital

IDBI Capital Report

Castrol India Ltd.’s Q2 CY24 results were in-line with our expectations. Castrol’s topline increased by 5% YoY and by 6% QoQ to Rs 14 billion. Sales volume grew 5% YoY and 5% QoQ, driven by new product launches and investments in branding and marketing. Personal Mobility segment contributed 40-45% of revenue, while commercial vehicles contributed 40%. Ebitda increased by 4% YoY to Rs 3.2 billion.

However, Ebitda margin contracted by 15bps YoY to 23.1% (up 91 basis points QoQ), primarily due to higher branding and marketing expenses.

The management has re-iterated margin guidance of 22-25% and aims to grow ahead of the industry volume growth of 3-4%. We revise our CY24 and CY25 EPS estimates by -1.3% & 2.8%, respectively.

We value the stock at a PER of 25 times CY25 EPS to derive a target price of Rs 254 (earlier Rs 199) and maintain our Hold rating on the stock.

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