Castrol India surges post Q1 results

The stock rallied 6% to Rs 412 after the company reported a better than expected growth in net profit during Q1FY16.

Castrol India has moved higher by 6% to Rs 412 on the BSE after the company reported a better than expected 17% year on year (YoY) growth in net profit at Rs 172 crore for the first quarter ended March 31, 2016 (Q1FY16). The company engaged in lubricants business reported profit of Rs 147 crore in an year ago.

Net sales grew by 7% at Rs 856 crore on YoY basis.

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Analysts on an average had expected profit of Rs 155 crore on revenues of Rs 791 crore.

The company delivered a strong set of results with operating profit up by 37% at Rs 247 crore as compared to the same period in the previous year, driven mainly by a 9% volume growth.

Earnings before interest, tax, depreciation and amortization (EBITDA) margin expanded by 600 basis points at 29.9% in Q1FY16 against 23.9% in the previous year quarter.

Managing Director, Omer Dormen said that the good performance was underpinned by volume growth across all segments, good progress on key strategic drivers and a continuing favourable cost of goods environment.

Commenting on the outlook for the rest of the 2016 year he said that he expects base oil prices to climb after seeing upward movement in crude oil prices. Rise in base oil prices together with the continuing rupee volatility could impact company's cost of goods.

On the other hand, the company expects the economy to become more vibrant with the optimistic monsoon forecast, resulting in increased vehicle sales and freight movement-both of which will positively impact the business, he adds.

Till 02:57 PM, a combined 2.89 million shares changed hands on the counter on the BSE and NSE.