Castrol India, engaged in automotive lubricants business,  reported better than expected Q1CY21 results as sales/EBITDA were 15%/8% above our forecasts led by stronger than expected volumes and realization.

Net sales increased by 65% YoY to Rs 11,380 million mainly led by strong in volumes (+58% YoY to 60 million ltrs) and higher realization (+6% YoY to Rs190/ltr). EBIDTA jumped 97% YoY to Rs3,401 million as EBIDTA margin increased by 474bps YoY to 29.9%. Net profit was higher by 95% YoY to Rs 2,436 million.

Commenting on the result review, IDBI Capital said, "We have raised our CY21/CY22 realization estimates given strong improvement in product mix witnessed in Q1CY21. As a result, our CY21/CY22 EBITDA estimates are higher by 13%/12%. We continue to value the stock at a PER of 17x CY22E EPS to derive a target price of Rs146 (earlier Rs143). We maintain our ACCUMULATE rating on the stock."

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