OPM rose by 560 bps to 27.5% leading to a 23% rise in operating profits to Rs 215.9 crore as cost of material consumed as a percentage of net sales decreased to 42.3% in the quarter ended September 2015 from 51.7% in the corresponding previous year period limited by advertisement sales and promotions which rose to 6.3% from 6%, purchase of stock in trade which increased 200 bps to 6.9% and employee benefit expense rose 70 bps to 5.9% and other expenses increased 90 bps to 8.1%.

Other Income increased 30% to Rs 14.9 crore in Q3CY15 from Rs 11.5 crore in Q3CY14 while interest cost was negligible at Rs 0.1 crore and depreciation rose 12% to Rs 9.4 crore. As a result PBT was up 24% to Rs 221.3 crore. The effective rate of tax rose to 35.3% from 33.8% leading a 21% increase in PAT to Rs 143.2 crore.

Automotive PBIT margins increased 560 bps to 27.8% while non-automotive segment was up 370 bps to 21.1%.

Commenting on the results, Omer Dormen, Managing Director, Castrol India Limited, said: "The financial results for the third quarter demonstrate a solid performance, building on operational momentum and continued premiumization of our portfolio, aided by a more favorable cost of goods environment."

"The business continues to be driven by strong performance in personal mobility segment with Castrol Activ increasing its market share and strengthening its leadership position in the two-wheeler engine oil category.

Continuing on the automotive performance, Omer said: "Power brands and Independent Workshop channel are also performing extremely well, both delivering double digit volume and margin growth year to date. The contribution of premium synthetic products like Castrol MAGNATEC and Castrol EDGE continue to grow.

Commenting on the Industrial part of the business, Omer Dormen said: "After sharp decline in the first two quarters due to sluggish manufacturing activity and increased competition, the Industrial business is seeing some improvement as a result of new customer wins especially in the wind and steel segments. On a like for like basis, our Sales Volume during third quarter remained flat versus same period last year. Year-to-date, the Industrial business delivered double digit Gross Margin and Operating profit growth over the same period last year, driven largely through increased focus on product mix."

For 9MCY'15 Net Sales of the company was down 1% at Rs 2507.1 crore compared to corresponding previous year while bottomline rose 39% to Rs 474.4 crore. OPM rose 710 bps to 27.2% leading a 34% rise in operating profits to Rs 682.8 crore. Other income increased 97% to Rs 73.6 crore while interest cost was down 67% to Rs 0.6 crore and depreciation up 19% to Rs 29.9 crore. PBT as a result rose 40% to Rs 725.9 crore. Effective rate of taxes rose to 34.6% from 34.1% leading a 39% increase in PAT to Rs 474.4 crore

The promoter's shareholding remains unchanged at 71.03% for quarter ended September 2015 compared to previous quarter.

Outlook as per company

The strong result during the first nine months of the year have been achieved in an environment which continues to be challenging for Commercial Vehicle Oils and Industrial lubricant oils. Looking ahead, although the drop in crude oil price has translated into lower base oil cost, we are likely to experience volatility in the cost of goods due to volatile Rupee exchange rate. In the longer run, we continue to remain optimistic about the Indian lubricant market and our business growth. The company is in a strong position to benefit from growth prospects on account of its strong brands, enduring relationships with key stakeholders and continued commitment of its staff.

The scrip is currently trading around Rs 443 on the BSE