Buy Castrol India; target of Rs 140: Sharekhan

Sharekhan is bullish on Castrol India has recommended buy rating on the stock with a target price of Rs 140 in its research report dated February 13, 2023.

Broker Research

March 10, 2023 / 17:58 IST

26 Aug, 2025 12:21

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Sharekhan's research report on Castrol India

Q4CY2022 PAT of Rs. 193 crore (up 2.6% y-o-y) was largely in-line as beat in per litre margin, higher other income, and lower tax rate gets offset by subdued lubricant sales volume. Volume performance was weak with an 8% miss at 48 mn litres (down 4% y-o-y) due to decline in industrial lubricant volume and soft demand from the CV segment. Better-than-expected realisation of Rs. 245/litre (up 12% y-o-y/2.7% q-o-q) reflects proactive pricing and led to 9%/3% beat in gross/EBITDA margin at Rs. 111/Rs. 52 per litre. Management has guided to grow its volume by few percentage points above the lube industry’s growth outlook of ~4% for CY2023 and is focused to maintain gross margin at CY2022 level. Recent investment in Ki Mobility Solutions would help expand presence in India’s automotive aftermarket eco-system via ‘myTVS’.

Outlook

We maintain Buy on Castrol India with an unchanged PT of Rs. 140, given inexpensive valuation of 12.8x its CY2023E EPS, healthy dividend yield of ~5%, and strong cash position.

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