Castrol India Limited — Q1 FY26 earnings call

Call held 6 Aug 2025

Management summary

Castrol India delivered a strong Q2 FY25, with robust revenue, EBITDA, and PAT growth driven by an 8% increase in overall volumes. The company outpaced market growth, particularly in industrial and rural segments, and maintained healthy margins despite market volatilities. Strategic initiatives in distribution expansion, product innovation, and digital engagement continue to fuel performance.

Highlights

  • Q2 FY25 Revenue from operations grew 7% YoY to INR 1,497 crores.

  • Q2 FY25 EBITDA increased 8% YoY to INR 349 crores.

  • Q2 FY25 PAT rose 5% YoY to INR 244 crores.

  • Overall volume growth for Q2 FY25 was 8% YoY, reaching 66 million liters.

  • Industrial segment volume grew 13% in Q2 FY25.

  • Rural segment volume grew 12% in Q2 FY25.

  • Interim dividend of INR 3.50 per share recommended.

  • EBITDA margin is at the upper end of the 21-24% guiding range.

Key financials

3 periods

Q2 FY25

  • Revenue
    ₹1,497 Cr
    YoY +7%
  • EBITDA
    ₹349 Cr
    YoY +8%
  • PAT
    ₹244 Cr
    YoY +5%
  • Overall Volume
    66 million liters
  • Advertising Expense
    ₹46 Cr
  • Price Hike Impact
    1.5%
  • Other Income Change
    ₹-11 Cr

1H FY25

  • Revenue
    ₹2,919 Cr
    YoY +7%
  • EBITDA
    ₹657 Cr
    YoY +7%
  • PAT
    ₹477 Cr
    YoY +6.5%
  • Advertising Expense
    —
    YoY +20%

YTD

  • Market Share Growth
    40 bps

What they filed

Q1 FY27: revenue up 25.0%, net profit up 42.6% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,288 1,354 1,422 1,497 1,363 +6%1,440 +6%1,545 +9%1,871 +25%
EBITDA286 376 307 350 323 +13%368 −2%329 +7%494 +41%
Net profit207 271 233 244 228 +10%245 −10%242 +4%348 +43%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Industrial (Volume Growth)
    13% Volume Growth
  • Rural (Volume Growth)
    12% Volume Growth
  • Bikes & Cars (Volume Growth)
    — Volume Growth
  • CBO (Volume Growth)
    8% Volume Growth
  • Personal Mobility (Sales Mix Q2 FY25)
    43% Sales Mix
  • CBO (Sales Mix Q2 FY25)
    44% Sales Mix
  • Industrial (Sales Mix Q2 FY25)
    12% Sales Mix

Capital allocation

high confidence
  • Dividend ₹3.5/share (interim)
    Additionally, delighted that Board has recommended an interim dividend of INR3.50, INR3.5 per share, subject to shareholders' approval.
  • Liquidity Cash ₹860 Cr The current cash position is upwards of INR860 crores. A special dividend of INR 550 crores was paid out from cash reserves, impacting interest income.
    Yes, sir. So, you should expect this to be a run rate in the future. And your sharp eye would have also picked up that earlier, our cash position was higher by about INR550 crores, which is the dividend -- special dividend that we paid out.

Guidance & targets

Profitability

  • EBITDA Margin Profitability · ongoing · High confidence 21-24%
    But I want to operate between a guiding range of 21% to 24%, and we are at the upper end of that guiding range at the moment.

    — Kedar Lele, Managing Director

Volume

  • Overall Lubricant Market Volume Growth Volume · ongoing · High confidence 3.5-4.5%
    If you see the automotive lubricant space as per Nielsen or some of the other rating agencies who do the audit, is expected to be in the range of 3.5% to 4.5%.

    — Kedar Lele, Managing Director

  • Castrol's Overall Volume Growth Volume · ongoing · High confidence 8%
    For that, if we are growing by 8% at an overall level, of course, we are gaining shares.

    — Kedar Lele, Managing Director

  • Industrial Segment Growth Volume · ongoing · Medium confidence robust double-digit growth
    We expect robust growth coming in from our industrial segment, supported by our rural outreach that I spoke about.

    — Kedar Lele, Managing Director

  • Rural Outreach Growth Volume · ongoing · Medium confidence robust growth

    — Kedar Lele, Managing Director

Other Income

  • Other Income Run Rate Other Income · future · Medium confidence Q2 FY25 run rate
    Yes, sir. So, you should expect this to be a run rate in the future.

    — Kedar Lele, Managing Director

What to watch in Q2 FY26

Data Center Lubricants Commercialization

Next few quarters
Current Testing ongoing with hyperscalers, 'still a little far away'
Target First customer acquisition/commercial launch

Why it matters

Represents a new growth avenue and diversification for the company.

But suffice it to say that one, technology progress has happened. We are working very closely with the hyperscalers and the data center operators. And when they make the decision, we would be at the front line of implementing those solutions with them.

Risks & concerns

  • Macroeconomic challenges and volatilities

    medium

    Impacts the operating environment but company resilience and diverse portfolio help navigate.

    Management acknowledged

  • Input cost volatility

    medium

    Headwind managed through disciplined expense management and operational efficiencies.

    Management acknowledged

  • Competitive market

    medium

    Factor in maintaining margins, managed through growth strategies and profitability focus.

    Management acknowledged

  • Supply chain disruptions (Southeast Asia)

    medium

    Exxon refinery maintenance led to higher inventory, but considered temporary.

    Management acknowledged

  • Increased trade receivables

    medium

    Due to expansion into B2B/industrial and disruptions in J&K, but expected to normalize.

    Management acknowledged

Q&A highlights

6 direct
Volume Growth Breakdown and BP Divestment Direct
our overall growth has been at 8%. And to give a little more color to how each of the segments have grown, our bikes and cars have been in high single digits. Our CBO has been at 8% again, and our industrial has been at 13%. And with that, we've been able to get to the overall number being at 8%.

Provided detailed segment-wise volume growth and clarified the strategic implications of BP's decision to carve out Castrol.

Asked by Nitin Tiwari

Industrial Segment Margins Direct
I want to operate between a guiding range of 21% to 24%, and we are at the upper end of that guiding range at the moment. And if we operate within that, I think we'll still be a fantastic stock in the company to look out for.

Addressed how the company maintains profitability in the typically lower-margin industrial segment through strategic levers and localization.

Asked by Sabri Hazarika

Automotive Pricing Strategy and Data Center Lubricants Progress Partial
data center testing are quite rigorous, and they go on for a few months... it's still a little far away.

Clarified the company's premium pricing strategy for automotive lubricants and provided an update on the nascent but promising data center fluids business, indicating it's still in early stages.

Asked by Dhaval Popat

Rural Push Investment and Non-Lubricant Portfolio Direct
in the first half of this year, we have sold 100% more volume than what we did in the whole of last year. So that should tell you the excitement that we have had.

Detailed the multi-pronged approach to rural expansion and highlighted the significant growth and potential of the non-lubricant Auto Care product portfolio.

Asked by Sana

Ethanol Impact on Engines and Sales Mix Breakdown Direct
most of our automotive brands in India are preparing engines, which can handle flex fuel. And with that, the requirement from engine oil also changes. So, we have been working with OEMs. Our products are capable of handling e20, e30, and that description does come on the packs.

Addressed concerns about ethanol's impact on engines, assuring product readiness, and provided a clear sales mix breakdown for Q2 FY25.

Asked by Nitin Tiwari

Advertising Expenses, Price Hikes, and New OEM Partnerships Direct
Our advertising expense for the quarter is in the same range bound and the exact amount is INR46 crores, which is actually a bit lesser than what we did in the base. But for the first half of the year, our advertising expense is higher by 20%.

Provided specific figures for advertising spend, confirmed selective price hikes, and clarified the status of OEM engagements.

Asked by Nakul Dev

Other Income and Working Capital Management Direct
other income has gone down in this quarter by about INR11 crores. But you remember that when I announced the last quarter results, there was a special dividend announced by us, and that took a large part of our cash reserves being distributed to shareholders.

Explained the reasons for the decline in other income and the temporary increase in working capital, linking it to a special dividend payout and supply chain issues.

Asked by Gaurav Jain

3 min read 7 chapters

Detailed narrative

Strong Financial Performance in Q2 FY25

Castrol India reported robust financial results for Q2 FY25, with revenue from operations growing 7% year-on-year to INR 1,497 crores. EBITDA increased by 8% to INR 349 crores, and Profit After Tax (PAT) rose 5% to INR 244 crores. For the first half of FY25, revenue stood at INR 2,919 crores (up 7%), EBITDA at INR 657 crores (up 7%), and PAT at INR 477 crores (up 6.5%). The Board also recommended an interim dividend of INR 3.50 per share.

Robust Volume Growth and Market Share Gains

The company achieved an impressive 8% overall volume growth in Q2 FY25, reaching 66 million liters, significantly outpacing the broader automotive lubricant market growth of 3.5-4.5%. This growth was broad-based, with the industrial segment volumes increasing by 13%, rural volumes by 12%, and bikes/cars and CBO segments showing high single-digit and 8% growth, respectively. Castrol India's market share grew by 40 basis points year-to-date, demonstrating strong competitive performance.

Strategic Focus on Industrial and Rural Markets

Castrol India's 'Bharat strategy' is yielding results, with a strong focus on expanding its reach in rural areas through 1,000 sub-distributors covering 30,000-35,000 retailers. The industrial segment is a key growth area, experiencing robust double-digit growth, supported by the local production of high-margin metalworking fluids like Hysol MB 50 and Hysol 20 XBB. The company's Chemical Management Services (CMS) offering is also gaining strong momentum and is operational at multiple sites.

Diversification into Auto Care and Digital Initiatives

The company is actively diversifying its portfolio beyond traditional lubricants, with its Auto Care product range (shiners, sponges, cloths) now available across e-commerce and modern trade, selling 27,000 pieces in June alone. Digital initiatives are enhancing customer and mechanic engagement, exemplified by the Fast Scan mechanic app, used by over 1 million mechanics, which recorded over 200,000 transactions in the quarter. These efforts aim to build Castrol into a service-led digitally enabled mobility brand.

EBITDA Margin Management and Pricing Strategy

Despite facing macroeconomic challenges, input cost volatility, and a competitive market, Castrol India successfully maintained its EBITDA margin at the upper end of its guiding range of 21-24%. This was achieved through disciplined expense management, operational efficiencies, and a strategic pricing approach. The company implemented selective price hikes across its portfolio in H1 FY25, which contributed a 1.5% delta to revenue in Q2.

Progress in Data Center Fluids and Sustainable Solutions

Castrol India is exploring new growth avenues, including data center fluids, with testing ongoing in partnership with hyperscalers, though commercialization is still some time away. The company is also committed to sustainability, being the first lubricant manufacturer to commercially produce RRBO-based engine oils for BS-IV vehicles in partnership with an OEM. Furthermore, its products are evolving to handle flex fuels (e20, e30) in collaboration with OEMs.

Temporary Working Capital Increase and Other Income Impact

Working capital saw a temporary increase due to higher inventory levels, driven by volume growth and an abnormal supply situation in Southeast Asia following Exxon refinery maintenance. Trade receivables also increased due to expansion into B2B/industrial segments and disruptions in J&K. Other income decreased by INR 11 crores year-on-year in Q2, primarily attributed to a special dividend payout of INR 550 crores from cash reserves in the previous quarter and the absence of a property sale from the prior year. Management expects working capital to normalize in due course.

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