Castrol Q1 Results Review: Downgraded To 'Hold' Rating As IDBI Capital Sees Limited Upside After Recent Rally

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IDBI Capital Report

Castrol India Ltd.’s revenue and PAT was in-line with our expectations. Castrol’s topline increased by 7% YoY and by 5% QoQ to Rs 14.2 billion. Sales volume grew 8.6% YoY and 6.8% QoQ, driven by strong volume growth in the low priced premium portfolio. The Personal Mobility and CVs reported double digit volume growth in Q1 CY25.

Ebitda increased by 5% YoY to Rs 3.1 billion, however the Ebitda margin contracted by 55bps YoY to 21.6% (down 615bps QoQ), primarily due to higher advertisement spends on Castrol active campaign. Management will be focusing on expanding the distribution network across rural and urban India.

We value the stock at a PER of 20 times CY26E EPS to derive a target price of Rs 223 (Rs 219 earlier), and we downgrade our rating from Buy to Hold on the stock due to recent rally in the stock price limiting the upside.

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