In This Article:
Release Date: February 04, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Castrol India Ltd (BOM:500870) reported a 6% increase in revenue for the full year 2024, demonstrating strong top-line growth.
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The company achieved a 14% year-on-year increase in profit before tax for Q4 2024, highlighting improved profitability.
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Castrol India Ltd (BOM:500870) has expanded its product portfolio with new launches, including Castrol Edge variants and CRB Turbomax, enhancing its market offerings.
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The company has made significant inroads into rural markets, expanding its reach to over 36,000 workshops and retail outlets.
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Sustainability initiatives have been a focus, with over 50% of recycled plastic used in HDP bottles and a 45% reduction in CO2 emissions at the Silvasa plant.
Negative Points
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The company faces challenges with forex fluctuations, which could impact input costs as 50-60% of materials are imported.
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There is a potential risk of cannibalization within the product range, particularly with the introduction of the Essentials range.
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The market perceives Castrol India Ltd (BOM:500870) as being in a terminal decline due to the rise of electric vehicles, affecting stock valuations.
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The company has not provided specific guidance on future volume growth, which could create uncertainty for investors.
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Despite efforts, the sales per outlet have decreased over the years, indicating potential inefficiencies in distribution or market saturation.
Q & A Highlights
Q: Could you share the 4th quarter volumes as well as the full calendar year volumes? A: The 4th quarter volume was 59 million liters, and the full year volume was 234 million liters. (Answered by CFO, Dipesh Bakshi)
Q: Can you elaborate on the strategy to become more accessible to customers in financial and operational terms? A: Castrol is a market leader and a premium brand, but we have introduced the Essential brand to target the middle market, which has shown minimal cannibalization. This strategy allows us to grow consistently while maintaining profitability. (Answered by Managing Director, Kadar Lili)
Q: How are you managing input cost hikes, especially with crude oil and forex fluctuations? A: The relationship between crude oil and base oil has decoupled, but we have a pricing strategy in place. We have already taken some pricing interventions to manage forex impacts, and we use predictive models for strategic pricing. (Answered by CFO, Dipesh Bakshi)