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Castrol India reported 19% increase in its bottom-line to Rs 164.2 crore in Q2CY'18 on a 17% increase in topline to Rs 1017.2 crore compared to corresponding previous year period. Profits were driven largely by higher volume as well as improved margin.
OPM was up 70 bps to 24.7% leading to a 20% rise in operating profits to Rs 251.7 crore as cost of material consumed as a percentage of net sales increased 30 bps to 44.4% in the quarter ended June 2018 from 44.1% in the corresponding previous year period while employee benefit expenses fell 40 bps to 5.2%, and other expenses fell 140 bps to 19.3% while purchase of stock in trade increased 50 bps to 6.4%.
Other Income increased 12% to Rs 17.3 crore in Q2CY18 from Rs 15.5 crore in Q2CY17 while interest cost was negligible at Rs 0.3 crore and depreciation rose 12% to Rs 13.2 crore. As a result PBT was up 20% to Rs 255.5 crore. Effective rate of tax rose to 35.7% from 35.3% leading a 19% increase in PAT to Rs 164.2 crore.
For H1CY'18 Net Sales of the company was up 11% at Rs 1944.3 crore compared to corresponding previous year while bottomline rose 9% to Rs 346 crore. OPM rose 10 bps to 27.1% leading a 11% rise in operating profits to Rs 526 crore. Other income increased 18% to Rs 40.1 crore while interest cost was Rs 1 crore and depreciation up 14% to Rs 27.5 crore. PBT as a result rose 11% to Rs 537.6 crore. Effective rate of taxes rose to 35.6% from 34.3% leading a 9% increase in PAT to Rs 346 crore.
The Board of Directors of the Company has at its meeting held on 31 July 2018 recommended an interim Dividend of Rs.2.25 per share (2017: Interim dividend Rs.4.50 per share). The said interim Dividend is on the enhanced paid up share capital post issue of Bonus shares in the ratio of 1:1 allotted on 26 December 2017. The record date for the purpose of said Interim Dividend is 10 August 2018 which would be paid on or before 29 August 2018.
Commenting on the results, Omer Dormen, Managing Director, Castrol India Limited said: "I am delighted with our continued strong financial performance during the second quarter April-June 2018. In line with our strategy, we have delivered volume growth for the tenth successive quarter, year on year (except the quarter of April – June 2017 impacted by the GST transition), despite the steep rise in input costs."
"Close to 80% of our growth has come from the new products launched during the last nine months. What is particularly pleasing is that despite the challenging cost environment, we have grown faster than the automotive lubricants market."
"While personal mobility continues to be a key strategic growth driver, the focus on our significant commercial vehicle engine oil portfolio is also delivering results with record volume growth driven by launch of new products and aided by a favourable economic environment, with emphasis on infrastructure development."
Outlook as per company
With the continued volatility in crude oil price and steep depreciation of the Indian rupee, the company expects a challenging second half, but will be taking appropriate actions to support the volume growth momentum.
Despite these short term challenges, Castrol India continues to remain optimistic about the long term growth potential of the business aligned to its long term strategy underpinned by continued investments in technology and brands, aggressive expansion of distribution network, innovative marketing programmes and delivery of premium customer experience across multiple touch points.
The scrip is currently trading around Rs 168 on the BSE
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