Castrol India spikes 5% after management’s strong guidance in analyst meet

Shares of Castrol India, which enjoys a monopoly in the lubricant space, spiked as much as 5 per cent intra-day to Rs 208.2 on Tuesday, February 27 and, hence, were just at a touching distance of its 52-week high of Rs 214 marked on February 19.

The strong guidance by the company’s management in its investors’ meeting led the stock to log such gains.

In a month’s time, the stock has registered 17 per cent gains, while over one year, the returns have been to the tune of 73 per cent.

In its analyst meeting, the company said it has made a shift in its focus to volume growth as opposed to earlier margin growth. Further, it added that amid the company’s new brand launches, tie-ups, and focus on the industrial segment, volume growth will be aided.

The company also stated that it would focus on its expansion in rural areas. At the same time, the company held that its net earnings margin, or EBITDA margin, would be maintained between 22 and 26 per cent.

Furthermore, Castrol will log growth on par with the industry of 4-5 per cent.

Besides, the company is expanding its scope beyond the core lubricant business and seems to benefit from its foray into segments such as EV transmission fluids and automotive care products. 

Additionally, the company specified that in CY24, the company’s capex will be up to Rs 150 crore, a 50 per cent increase over its capex in CY23.