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Buy Castrol India: target of Rs 150: Sharekhan

Sharekhan is bullish on Castrol India has recommended buy rating on the stock with a target price of Rs 150 in its research report dated April 27, 2021.

June 09, 2021 / 06:28 PM IST
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Sharekhan's research report on Castrol India

Revenues/Operating profit at Rs. 1,139 crore/Rs. 340 crore, rising by 66%/97% y-o-y and sharply beating our estimates by 24%/46% led by a strong beat of 22% in sales volume at 61 million litres and a 447 bps in OPM at 29.9%. Volumes surged driven by growth across CV, two-wheeler, four-wheeler and industrial segments as demand was robust in January/February’ 21 and there was benefit of pent-up demand. Cost efficiency and price hikes in January led to better margin. Q2CY21 volumes to get impacted given lockdowns but may be better on y-o-y given low base of last year (full shutdown in Apr/May’20). Despite concern on near-term volumes, Castrol’s alliance with Jio-BP and Ki Mobility would aid volume growth & market share gain.


Valuation of 13.3x CY22E EPS is attractive (46% discount to historical level) despite decent earnings growth, FCF/dividend yield of 9%/6% and RoE of ~55-60%. We maintain Buy on Castrol with an unchanged PT of Rs. 150.

For all recommendations report, click here

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Broker Research
first published: May 13, 2021 01:26 pm

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