Castrol India - Q3CY20 Company Update - ICICI Securities

Castrol India reported a healthy set of Q3CY20 numbers. Operating revenue for Q3CY20 increased 4% YoY to Rs. 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 Rs. 113/litre due to lower base oil prices. Subsequently, EBITDA/litre was at Rs. 61.3/litre, up 10.9% YoY. EBITDA came in at Rs. 288.2 crore, up 17.9% YoY. Consequently, PAT was at Rs. 204.6 crore, up 8.6% YoY.

Valuation & Outlook

A sharp rebound in margins as well as volumes during the quarter is a positive. Although Castrol has been successful in signing agreements with many automobile and oil & gas players in the industry, its strategy to defend potential disruptions like higher drain interval, electric cars will be the key monitorable for long term volume growth, going ahead. In the near term, Castrol is expected to report strong volume growth YoY in CY21E mainly due to the low base effect. The focus on maintaining balance between margins & volumes along with growth in the personal mobility segment will be a key factor directing the company ahead. We maintain HOLD rating on the stock. We roll over valuations to CY22E and value Castrol India at 14x CY22E EPS of Rs. 8.3 to arrive at a target price of Rs. 115.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Castrol_CoUpdate_Nov20.pdf

Shares of CASTROL INDIA LTD. was last trading in BSE at Rs.111.85 as compared to the previous close of Rs. 111.4. The total number of shares traded during the day was 65656 in over 1500 trades.

The stock hit an intraday high of Rs. 112.85 and intraday low of 111.15. The net turnover during the day was Rs. 7352361.

Source : Equity Bulls

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