Castrol India Limited — Q2 FY26 earnings call

Call held 6 Nov 2025

Management summary

Castrol India delivered a strong Q3 FY25, marked by consistent volume and revenue growth, alongside improved profitability. The company's strategic focus on expanding its rural and industrial market presence, coupled with product innovation and network expansion, drove performance. Key initiatives included the launch of new auto care products and a significant partnership in the EV mobility sector, positioning Castrol for future opportunities despite external market volatility.

Highlights

  • Revenue from operations for Q3 FY25 was INR1,363 crores, representing a 6% year-on-year growth.

  • Volumes grew by 7% during Q3 FY25, contributing to the revenue growth.

  • EBITDA for Q3 FY25 was INR323 crores, an increase of INR37 crores compared to the previous year.

  • Profit After Tax (PAT) for Q3 FY25 was INR228 crores, 10% higher than the same quarter last year.

  • For the 9 months ended September 30, 2025, revenue reached INR4,282 crores (7% YoY growth), EBITDA INR980 crores (9% YoY growth), and PAT INR705 crores (8% YoY growth).

  • YTD volume growth stood at 8%, outpacing industry bottom-line volume growth.

  • Cost per liter of lubricant decreased by 5% in Q3 and 2-3% YTD, contributing to gross margin expansion.

  • Signed an MoU with VinFast Auto to support their entry into India's EV market, leveraging Castrol's service network.

Key financials

3 periods

Headline

  • Revenue from Operations
    ₹1,363 Cr
    YoY +6%
  • EBITDA
    ₹323 Cr
  • PAT
    ₹228 Cr
    YoY +10%

Q3

  • Volume Growth
    0.07 decimal_fraction
  • Cost per liter of lubricant reduction
    -0.05 decimal_fraction

9M

  • Revenue
    ₹4,282 Cr
    YoY +7%
  • EBITDA
    ₹980 Cr
    YoY +9%
  • PAT
    ₹705 Cr
    YoY +8%
  • Volume Growth
    0.08 decimal_fraction
  • Cost per liter of lubricant reduction
    -0.025 decimal_fraction

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

SegmentVolume Growth (Q3)Volume Share
Personal Mobility0.06 decimal_fraction49%
Commercial Vehicle Oils (CVO)0.08 decimal_fraction39%
Industrial/Marine—13.5%
Rural B2C——

Capital allocation

high confidence
  • M&A VinFast Auto Joint venture · Announced

    To support VinFast's foray into India's EV market by leveraging Castrol's workshop network for aftersales service.

    Generates a new revenue stream for workshops and aligns with commitment to sustainable mobility.

    During Q3, we signed a notable MoU with VinFast Auto, the Vietnamese EV manufacturer to support their foray into India's EV market. Under this agreement, VinFast will leverage Castrol's workshop network, select Castrol auto service outlets, if you will, to provide aftersales service for VinFast EV customers nationally.

Guidance & targets

Profitability

  • EBITDA Margin Profitability · Ongoing · High confidence 21-24%
    And if I were you, I would be really, really happy with Castrol as long as Castrol delivers the EBITDA in 21, 23, not even 24 and consistently delivers the volume growth of 7%, 8% and the sales growth of 6%, 7%, which means you're seeing an EPS growth of 6% to 7% on a very, very solid base instead of then asking saying, can you do more?

    — Kedar Lele, Managing Director

  • EPS Growth Profitability · Ongoing · High confidence 6-7%

    — Kedar Lele, Managing Director

Revenue

  • Sales Growth Revenue · Ongoing · High confidence 6-7%
    And if I were you, I would be really, really happy with Castrol as long as Castrol delivers the EBITDA in 21, 23, not even 24 and consistently delivers the volume growth of 7%, 8% and the sales growth of 6%, 7%, which means you're seeing an EPS growth of 6% to 7% on a very, very solid base instead of then asking saying, can you do more?

    — Kedar Lele, Managing Director

Volume

  • Volume Growth Volume · Ongoing · High confidence 7-8%
    And if I were you, I would be really, really happy with Castrol as long as Castrol delivers the EBITDA in 21, 23, not even 24 and consistently delivers the volume growth of 7%, 8% and the sales growth of 6%, 7%, which means you're seeing an EPS growth of 6% to 7% on a very, very solid base instead of then asking saying, can you do more?

    — Kedar Lele, Managing Director

What to watch in Q3 FY26

Rural Penetration Volume Growth

next quarter
Current Double-digit growth, 25-30% of B2C volumes
Target Continued double-digit growth and increased share

Why it matters

Rural markets are a key speedboat for volume-led growth and market penetration.

The strong growth momentum from rural and industrial areas validates our emphasis on penetrating Bharat markets... This push for rural penetration is reflecting in our performance as volumes continue to grow across sectors.

Risks & concerns

  • External Market Volatility

    medium

    Market conditions remained volatile with base oil fluctuations and out-of-range forex movements adding pressure.

    Management acknowledged

  • Industrial Lubricants Lower Profitability

    medium

    Industrial lubricants, even high-performance ones, yield lower gross margins (25-30% of automotive) compared to automotive lubricants.

    Management acknowledged

  • Base Oil Price Volatility and Correlation

    medium

    Base oil prices have a low correlation with crude oil prices, making their movement difficult to predict, despite a definite causality.

    Management acknowledged

  • EV Transition Impact on Engine Oil Demand

    medium

    The shift to EV vehicles will reduce demand for traditional engine oils, requiring adaptation of product portfolio.

    Analyst acknowledged

  • Global Strategic Review Uncertainty

    low

    Analyst concern about the impact of BP's global strategic review on Castrol India, though management asserts no change to India strategy.

    Analyst downplayed

Q&A highlights

6 direct
Leadership Change and Strategic Direction Direct
So as long as as far as I see, there's no change of strategy in the near or midterm. Of course, there will be some decisions that will happen basis the strategic review outcome of Castrol, which should strengthen our play in India and South Asia.

Addresses investor concern about potential strategy shifts following recent and upcoming leadership changes, confirming continuity.

Asked by Harsh, Individual Investor

ki Mobility Solutions Investment Performance Partial
So see, it's a private company and our investment is predicted, as I said. And the revenue that we get is from sale of lubricant into that network. We also get a small commission on sale of spare parts in that network and so on. So that is a small part of our revenues, and we don't identify that in our results as yet.

Clarifies the nature and financial contribution of the ki Mobility investment, indicating it's not a direct revenue line item in reported results but provides strategic benefits.

Asked by Harsh, Individual Investor

Industrial Lubricants Margin Dilution Direct
Having said that, you would appreciate it, Dhaval, that industrial lubricants, how much ever high performance they may be, will never make same money or margin as automotive lubricants do, right? Because it's an industrial COGS. And hence, I keep saying that we have to balance how much growth we get from industrial versus the profitability growth that we must get from ICE engines as well as EV fluids.

Explains the inherent margin difference between industrial and automotive lubricants and management's strategy to balance growth with profitability in the industrial segment.

Asked by Dhaval Popat, Choice International

EV Penetration and Fluids Strategy Direct
But an EV vehicle also uses fluids. For example, there is a transmission fluid, there are greases that you have to use and EV vehicle tends to be heavier than a normal vehicle, which means that the rotating parts require more frequent maintenance. And if your battery tends to use a coolant, then we also make that coolant.

Provides insight into Castrol's strategy for the EV transition, highlighting that EVs still require various fluids and maintenance, creating new opportunities.

Asked by Dhaval Popat, Choice International

Global Strategic Review of Castrol Partial
BP announced the strategic review of our Castrol business globally around February in this year, if I remember right. And the intention was very simple that they accelerate Castrol's next phase of value delivery while BP retires some of its debt by giving the value of the assets called Castrol.

Offers context on the global strategic review initiated by BP, its objectives, and Castrol India's involvement in providing data, while emphasizing that the India strategy remains unchanged.

Asked by Kirtan Mehta, Baroda BNP Paribas Mutual Fund

Data Center Opportunity (Liquid Cooling) Direct
Data center opportunity is real. It's a global opportunity which runs into millions of liters of coolant... Now I have been waiting for my first announcement to be made in India because these testing go on for a very long time... And I said last time that in coolant space, the accepted margin in Western world is about $1 per liter.

Highlights a significant new growth avenue for Castrol in the data center industry with potentially high margins, detailing the ongoing development and market potential.

Asked by Mandar Pawar, Kotak Mahindra Asset Management Company

Forex Hedging and EBITDA Margin Outlook Direct
When it comes to forex volatility, I think of it in 2 parts. What we at Castrol do is we ensure that the volatility doesn't give us any shocks in the P&L, which is why while in the July, August, September quarter, the rate went from, I think, $86 and it even touched $90 at a point in time, our P&L was protected because we had hedged for the quarter.

Explains the company's forex hedging strategy to mitigate P&L shocks and reiterates confidence in maintaining EBITDA margins within the guided range.

Asked by Dhaval Popat, Choice International

Impact of Castrol Sale on Employee Incentives Direct
So no, BP globally does not make any base oil and Castrol is the one across the world for our 2.2 billion, 2.3 billion liters of sales, we do buy base oil from multiple suppliers. And these global deals are with Castrol, and we get benefited because we also consume a hell of a lot of that material, and we get appropriately discount coming into our numbers because of what we buy as part of global Castrol. So none of these discounts that we see in the Q4 will get affected by any strategic sales.

Clarifies that global base oil procurement benefits and associated discounts are tied to Castrol as a global entity, not BP, implying that a potential sale of Castrol would not impact these benefits for Castrol India.

Asked by Harsh, Individual Investor

3 min read 7 chapters

Detailed narrative

Strong Q3 and YTD Financial Performance

Castrol India reported robust financial results for Q3 FY25, with revenue from operations reaching INR1,363 crores, marking a 6% year-on-year growth, primarily driven by a 7% increase in volumes. EBITDA for the quarter was INR323 crores, up INR37 crores, and Profit After Tax (PAT) grew by 10% YoY to INR228 crores. For the nine months ended September 30, 2025, the company achieved INR4,282 crores in revenue (7% YoY), INR980 crores in EBITDA (9% YoY), and INR705 crores in PAT (8% YoY), with YTD volume growth at 8%, consistently outperforming industry bottom-line volume growth.

Strategic Focus on Rural and Industrial Growth

The company's strategy to accelerate volume growth is yielding positive results, particularly through enhanced penetration in rural markets and a strengthened industrial segment presence. Rural B2C volumes now account for 25-30% of total B2C numbers and are experiencing double-digit growth, supported by a network of over 40,000 outlets and 500+ Castrol kiosks. The industrial segment also demonstrated strong double-digit growth in Q3, validating its role as a key growth driver and a segment protected from EV transition.

Product Innovation and Portfolio Diversification

Castrol continues to innovate and expand its product portfolio to meet evolving customer needs. A notable launch in Q3 was the Castrol All-in-One Helmet Cleaner, an innovative foam spray solution addressing helmet hygiene for 2-wheeler riders, extending Castrol's auto care offerings beyond traditional engine oils. The company also introduced upgraded lubricant variants, including Castrol MAGNATEC engine oil compliant with the latest API SQ specification, and is localizing EV fluids under the Castrol ON range for the Indian market.

Expanded Distribution and Service Network

Castrol India has relentlessly expanded its distribution and service network, making its products available through over 150,000 retail outlets nationwide, including 40,000+ in rural areas. The branded service network, Castrol Auto Service (CAS) centers, has grown to over 750 across 300 cities, up from 580 a year ago. This extensive network, combined with 33,000 independent bike workshops and 12,000 multi-brand workshops, strengthens Castrol's service delivery capabilities.

Strategic Entry into EV Mobility Services

A significant development in Q3 was the signing of an MoU with VinFast Auto, a Vietnamese EV manufacturer, to support its entry into the Indian EV market. This partnership will leverage Castrol's existing workshop network and auto service outlets to provide aftersales service for VinFast EV customers nationally. This collaboration not only creates a new revenue stream for Castrol's workshops but also aligns with the company's commitment to supporting India's transition to sustainable mobility by ensuring service support for EV owners.

Financial Discipline and Sustainable Profitability

Despite external volatility, Castrol maintained strong financial discipline, focusing on cost management and operational efficiencies. The cost per liter of lubricant decreased by 5% in Q3 and 2-3% for the nine-month period, contributing to gross margin expansion. The company aims to sustain an EBITDA margin in the 21-24% range and deliver consistent EPS and sales growth of 6-7%, emphasizing a balanced approach to growth and profitability.

Future Opportunities in Data Centers

Castrol is actively exploring the emerging data center market, particularly in liquid cooling solutions, which represents a significant global opportunity involving millions of liters of coolant. The company is conducting trials with hyperscalers and data center operators, with management anticipating a potential margin of around $1 per liter in this segment. While awaiting the first commercial orders, this initiative marks Castrol's strategic entry into a new, high-potential sector beyond traditional automotive applications.

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