Dolat Capital: Castrol India’s Volume De-Growth Due To Economic Slowdown And Lockdown
Oil pours over the hand of an employee working with a lathe on the production line at a manufacturing facility. (Photographer: Sanjit Das/Bloomberg )

Dolat Capital: Castrol India’s Volume De-Growth Due To Economic Slowdown And Lockdown

BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

Dolat Capital Report

Castrol India Ltd.’s results were in line with our estimates on revenue front and below estimates on profitability front.

Castrol’s Q2 CY20 volumes were in line with our estimates at 29 thousand kilo litre. Realization was at Rs 169.2/litre.

Revenue decreased 52.8% YoY and 28.7% sequentially due to lockdown. However, there was slow demand pick up from May and momentum was stable from June.

Gross spreads decreased by 16.9% on a sequential basis. We expect spreads to expand going forward, as Castrol India will keep taking pricing actions as and when required and will take necessary steps to keep cost in control.

Cost per litre improved 4.8% on a sequential basis and declined by 4.8% YoY due to strategic sourcing of raw material.

Castrol India has been continuously working on protecting margins with sustainable growth. Given the under performance of the stock price for a prolonged period, the company’s business performance in the next couple of quarters will be crucial for the long term stock outlook.

Click on the attachment to read the full report:

Dolat Capital Castrol India Q2 CY20 Result Update.pdf

DISCLAIMER

This report is authored by an external party. BloombergQuint does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the brokerage and do not represent the views of BloombergQuint.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.