Castrol India reported a net profit of Rs.206 crore.

Castrol India manufactures and markets automotive lubricants and specialty products. It  is one of the world’s most important lubricant manufacturers and has announced its financial results for June 2022. The company reported a net profit of Rs. 206 Cr., up by 47% compared to Rs. 140 Cr. in June 2021. The company witnessed a 40% increase in revenue from operations to Rs 1,242 Cr in Q1 June 2022 over Rs 890 Cr in Q1 June 2021.

The management said the current quarter’s performance was due to a volatile market environment where they had to balance rising input costs while maintaining an optimal price and volume mix. They were affected by price increases in the first half of the year, which enabled them to deliver a resilient performance and helped to stay ahead of June 2021, though the volumes and margins were under pressure compared to March 2022.

Upcoming threats:

The company needs to keep balancing the need to drive growth and serve customers’ needs while protecting margins as inflationary and forex pressures are likely to continue in the coming period.

An integral element of their future-ready strategy is their foray into service and maintenance with new formats such as Castrol Auto Service and Castrol Express Oil Change outlets. In addition, they will also explore collaboration with electric vehicle OEMs to supply advanced electric mobility while continuing to launch new products in the traditional lubricant space. The board of directors of the company has declared an interim dividend of Rs 3 per share, which will be paid on or before August 31, 2022.

Valuations:

The EPS for the stock is at Rs. 8.18 and the P/E ratio is at 14.0 times. The ROCE and ROE for the company are at 67.5% and 49.6%, respectively. The P/B ratio is at 6.35 times and the book value of the company is Rs.18.1. The EBITDA is 8.34 times. The company is almost debt free.