Sharekhan's research report on Castrol India
Castrol management is now focused on volume-led growth while maintaining its margin guidance of 22-26%. The company aims to grow above the lubricant industry’s growth rate of 4-5% p.a. Expanding presence in rural areas is a key focus. Three-point strategy – Onward (mobility focused), Upward (industrial focused), Forward (new opportunities and growth beyond lubricants). Enhanced focus to diversify and grow beyond lubricants. Key areas include EV fluids, auto care, maintenance through branded workshops (investment of 7% in KI Mobility) and Castrol oil change through Jio-bp.
Outlook
We maintain Buy on Castrol India with an unchanged PT of Rs. 240. A valuation of 19x CY25E EPS seems reasonable given the decent growth outlook, healthy dividend yield of ~3-4%, high RoE of 48% and strong cash position.
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