Capitaline

Results 04-Aug-21

Analysis

Castrol India

Solid financial performance

Castrol India standalone net sales increased 81.33% to Rs 889.60 crore in Q1FY22 compared to Q1FY21. Operating profit margin has jumped from 19.43% to 22.20%, leading to 107.24% rise in operating profit to Rs 197.50 crore. Raw material cost as a % of total sales (net of stock adjustments) increased from 33.11% to 46.85%. Purchase of finished goods cost rose from 4.97% to 5.20%. Employee cost decreased from 10.63% to 6.39%. Other expenses fell from 27.85% to 20.26%.

Other income fell 12.50% to Rs 13.3 crore. Provision for interest fell 50% to Rs 0.7 crore. Provision for depreciation was down 3.40% to Rs 19.9 crore. Profit before tax grew 114.92% to Rs 190.20 crore. Provision for tax was expense of Rs 50.2 crore, compared to Rs 23.1 crore. Effective tax rate was 26.39% compared to 26.10%. Profit after tax rose 114.07% to Rs 140.00 crore.

Promoters’ stake was 51.00% as of 30 June 2021 compared to 51.00% as of 30 June 2020.

For year-to-date (YTD) results analysis

Net sales of Castrol India have increased 72.09% to Rs 2,028.30 crore.

Operating profit margin has jumped from 22.76% to 26.51%, leading to 100.37% rise in operating profit to Rs 537.60 crore. Raw material cost as a % of total sales (net of stock adjustments) increased from 40.10% to 43.90%. Purchase of finished goods cost rose from 4.33% to 4.88%. Employee cost decreased from 8.36% to 5.30%. Other expenses fell from 24.07% to 19.89%.

Other income fell 21.14% to Rs 27.6 crore. Provision for interest fell 48% to Rs 1.3 crore. Provision for depreciation down 3.27% to Rs 41.4 crore.

Profit before tax grew 102.52% to Rs 522.50 crore. Provision for tax was expense of Rs 138.9 crore, compared to Rs 67.4 crore. Effective tax rate was 26.58% compared to 26.12%. Profit after tax rose 101.26% to Rs 383.60 crore.

Equity capital stood at Rs 494.60 crore as of 30 June 2021 to Rs 494.60 crore as of 30 June 2020. Per share face Value remained same at Rs 5.00.

Promoters’ stake was 51.00% as of 30 June 2021 compared to 51.00% as of 30 June 2020.

Sandeep Sangwan, Managing director, Castrol India Limited commented:

Castrol India Limited reported a solid financial performance and resilient business delivery in 2Q 2021 maintaining the momentum built over the previous few quarters. We delivered a strong set of numbers with both topline and bottom line seeing good growth versus the same period of last year, which was subdued on account of a national lockdown brought about by the first wave of the pandemic.

Owing to the Covid second wave, the quarter saw challenges in the form of localized lockdowns, muted demand, as well as a sharp rise in input costs. Our timely pricing interventions, along with agility and responsiveness helped us navigate this dynamic market situation. We continued to invest in our brands with increased marketing and advertising spends to support value delivery to customers and reinforce brand salience.

In our endeavor to deliver quick and reliable service brand experience to consumers in collaboration with Jio-bp at their retail sites, we recently launched a new concept of Castrol Express Oil change outlets which offer quick oil change service for consumers on-the-go. We also leveraged digital platforms to continue building engagement with the biker community with our high performance synthetics range of Castrol POWER1 ULTIMATE two-wheeler engine oils through performance imagery led impact properties including Bollywood movie launch Toofaan.

Safety of our people and community support continue to be our strategic priorities along with protecting the financial health of the business during these difficult times. We have conducted

vaccination camps for our plant staff who continue to operate our manufacturing plants safely, while implementing Covid-19 safety processes and guidelines as laid out by the government, and also for our employees who continue to work from home.

During this period, we celebrated a key milestone of our manufacturing plant at Silvassa completing 25 years of safe and successful operations. The plant has evolved into an epitome of trust and reliability over the years for our customers including key OEMs, and is considered as one of the most modern lubricant plants in the region.

Our work with the trucker and mechanic communities was recently acknowledged when our flagship CSR programmes were recognized with ‘Excellence in CSR” award by British Business Group Delhi (BBG). The award to Castrol Eklavya for upskilling of mechanics and Castrol Sarathi Mitra programme for holistic development of truck drivers, is a recognition of our endeavours towards sustained livelihoods with pride for these communities, along with recent interventions such as student scholarships, family connect programmes focused on health and wellbeing along with Covid awareness, and community vaccination drives that have helped us forge an even stronger bond with them during the pandemic.

The Board of Directors of the Company has at its meeting held on 2 August 2021 recommended an interim dividend of INR 2.50 per share (2020: Interim dividend INR 2.50 per share; Final dividend INR 3.00 per share). The record date for the purpose of said interim dividend, which would be paid on or before 1 September 2021, is 12 August 2021.

We remain confident of our strong business fundamentals and longer term profitable business growth as the situation returns to a normal state.

The scrip is currently trading around Rs 141 on the BSE

Castrol India : Standalone Results
Particulars	2106 (03)	2006 (03)	Var.(%)	2106 (06)	2006 (06)	Var.(%)	2012 (12)	1912 (12)	Var.(%)
Net Sales	889.6	490.6	81	2,028.30	1,178.60	72	2,996.90	3,876.80	-23
OPM (%)	22.2	19.43		26.51	22.76		27.16	29.74
OP	197.5	95.3	107	537.6	268.3	100	814.1	1,153.00	-29
Other Inc.	13.3	15.2	-13	27.6	35	-21	62	64.8	-4
PBIDT	210.8	110.5	91	565.2	303.3	86	876.1	1,217.80	-28
Interest	0.7	1.4	-50	1.3	2.5	-48	4.2	1.2	250
PBDT	210.1	109.1	93	563.9	300.8	87	871.9	1216.6	-28
Depreciation	19.9	20.6	-3	41.4	42.8	-3	86.6	69.7	24
PBT	190.2	88.5	115	522.5	258	103	785.3	1146.9	-32
PBT before EO	190.2	88.5	115	522.5	258	103	785.3	1146.9	-32
EO Income	0	0	-	0	0	-	0	0	-
PBT after EO	190.2	88.5	115	522.5	258	103	785.3	1146.9	-32
Taxation	50.2	23.1	117	138.9	67.4	106	202.4	319.5	-37
PAT	140	65.4	114	383.6	190.6	101	582.9	827.4	-30
EPS (Rs)*	#	#		#	#		5.89	8.37
Notes
* EPS is on current equity of Rs 494.56 crore, Face value of Rs 5, Excluding extraordinary items.
# EPS is not annualised
bps : Basis points
EO : Extraordinary items
Figures in Rs crore
Source: Capitaline Corporate Database

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