Buy Castrol India; target of Rs 140: Motilal Oswal

Motilal Oswal is bullish on Castrol India recommended buy rating on the stock with a target price of Rs 140 in its research report dated November 01, 2022.

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November 02, 2022 / 18:54 IST

26 Aug, 2025 12:21

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Motilal Oswal's research report on Castrol India

EBITDA and PAT missed our estimate, given the continued volatility in crude oil prices, amid rising input costs. Realizations improved by 11% YoY and 8% QoQ in 3QCY22. Volume in 3QCY22 was modest at 47m liters, with the Personal Mobility/ CVs/ Industrial segment contributing 50%/30%/20% to overall volumes. CSTRL raised prices again in 3QCY22 after the previous price hikes in Mar’22 and Jun’22. The Indian Lubricants market is expected to grow at 4% in CY23, with the management expecting Cars to be the fastest growing segment, followed by CVs and Two-Wheelers. Industrial volumes are expected to see good traction as the economy recovers in CY23. The management expects forex pressures and the inflationary environment to continue in the near term. Its focus will be on protecting margin, while catering to its customers. In line with the same, amid sustained input cost pressure, we decrease our EBITDA/EPS estimate by 13% each for CY22 and by 13%/12% for CY23. CSTRL has always enjoyed its brand legacy. We believe it will be able to secure its profitability, with a better product mix, cost control, and launch of advanced products at a better realization. We reiterate our Buy rating.

Outlook

On a one-year forward P/E basis, the stock trades at a discount of ~50% to its long-term P/E average of 25.2x. We value the stock at 16x CY23E EPS to arrive at our TP target price of INR140. We maintain our Buy rating.

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