Hold Castrol India; target of Rs 115: ICICI Direct

ICICI Direct's research report on Castrol India

Castrol India reported a healthy set of Q3CY20 numbers. Operating revenue for Q3CY20 increased 4% YoY to Rs 883.1 crore. Volumes were at 47 million litre, up 6.3% YoY. Castrol witnessed an increase of 7.4% YoY in gross margins at Rs 113/litre due to lower base oil prices. Subsequently, EBITDA/litre was at Rs 61.3/litre, up 10.9% YoY. EBITDA came in at Rs 288.2 crore, up 17.9% YoY. Consequently, PAT was at Rs 204.6 crore, up 8.6% YoY.

Outlook

We roll over valuations to CY22E and value Castrol India at 14x CY22E EPS of Rs 8.3 to arrive at a target price of Rs 115.

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