Castrol India's (CSTRL) 2QCY20 volumes came in higher than estimated at 29m liter (v/s est. 19m liter and -48% YoY/-23% QoQ), while realization was lower at INR169/liter (v/s est. INR178/liter and -6% YoY). This resulted in net sales of INR4.9b (-53% YoY). Net realization was lower owing to a scheme announced in 2QCY20 to aid dealers/customers. The scheme ended in the quarter itself. -According to CSTRL, volume recovery momentum looks stable post Jun'20. However, the company has refrained from commenting on the outlook as various states have extended or imposed further lockdowns. A gradual pickup is being witnessed in demand for two-wheelers over other auto segments.
OutlookWe value the stock at 20x (in line with global peers) to arrive at a target price of INR170. Maintain Buy. For all recommendations report, click here
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