Castrol India Q3 Results Review - Inline With Expectations; Await A Better Entry Point Says IDBI Capital

IDBI Capital Report

Castrol India Ltd.’s Q3 CY24 revenue was broadly in-line with our estimates. Castrol’s top-line increased by 9% YoY but de-grew by 8% QoQ to Rs 12.8 billion. Sales volume grew 8% YoY, driven by new product launches and investments in branding and marketing.

Commercial vehicle segment grew in double digits, while the personal mobility segment grew only in mid-single digits. Ebitda increased by 7% YoY to Rs 2.8 billion. However, Ebitda margin contracted by 49 bps YoY to 22.2% primarily due to increased employee costs and higher other overheads.

The management has re-iterated margin guidance of 22-25% and aims to grow ahead of the industry volume growth of 3-4%. We adjust our CY24 and CY25 EPS estimates by -1%/-2%, respectively.

We value the stock at a PER of 22 times CY25 earnings per share to derive a target price of Rs 221 and maintain our Hold rating on the stock.

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