MOSL: CASTROL INDIA (Buy)-EBITDA beat led by higher volumes and realizations
Castrol India: EBITDA beat led by higher volumes and realizations
(CSTRL IN, Mkt Cap USD2.9b, CMP INR185, TP INR248, 34% Upside, Buy)
- CSTRL’s 1QCY18 revenue grew 5% YoY (but declined 4% QoQ) to INR9.3b, ahead of our estimate of INR9.1b, led by (a) higher volumes at 51.5m liters (+3% YoY, -5% QoQ; our estimate was 51.2m liters), and (b) better realizations at INR180.4/liter (+2% YoY, +1% QoQ; our estimate was INR177/liter). It took price hikes to pass on the increase in raw material cost (up 3% QoQ).
- Reported EBITDA of INR2.7b (+4% YoY, -11% QoQ) was also above our estimate of INR2.6b, aided by lower than expected raw material cost of INR83.4/liter (+4% YoY, +2% QoQ; our estimate was INR83.6/liter). EBITDA margin was 29.6% in 1QCY18 (29.8% in 1QCY17; 31.6% in 4QCY17).
- PAT grew 2% YoY (-8% QoQ) to INR1.8b against our estimate of INR1.7b.
- Volumes up 2.6% YoY to 51.5m liters: CSTRL’s total volumes grew 2.6% YoY, led by single-digit volume growth in the PCMO segment (~45% volume share) and CVO segment (~40% volume share). Adjusting for the one-time institutional order in 1QCY17, volumes grew 5% YoY in 1QCY18.
Castrol India is a manufacturer, distributor and marketer of lubricating oils, greases and related services to automotive, industrial, marine, aviation, oil exploration and production customers across the world. For automotive lubrication (including motorcycles 2-stroke and 4-stroke engines, car petrol and diesel engines), Co.'s products include a range of manual and automatic transmission fluids, chain lubricants and waxes, coolants, suspension fluids, brake fluids, greases, cleaners and maintenance products. Co. also produces products for agricultural machinery, plant, general industry and marine engineering uses.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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