shares of oil marketing & distribution companies Castrol India

Castrol India Ltd (updated - 19 Feb 2010)
Even after Castrol India reported a 70 per cent rise in net profit to Rs 80.80 crore for the fourth quarter ended December 2009 and announced abonus of one share for every one held, the Street wasn’t impressed.

Castrol’s stock was the biggest loser among Group-A stocks on Thursday. It declined 8.08 per cent to Rs 654 as against the Sensex’s 0.62 per cent fall. The decline can be attributed to its significant outperformance since the start of 2010; it has risen 17 per cent since then while the Sensex has gained just 6 per cent in the period.

For the December quarter, the 13.7 per cent increase in net sales to Rs 609.5 crore was the result of a 17 per cent rise in lubricant volumes. An upturn in economic growth and focus on growing segments, along with the benefit of alow base of 2008, aided robust volume growth.

The non-automotive lubricant business, though a small contributor to revenues, recorded a 6.4 per cent rise in net sales to Rs 81.9 crore. The first nine months saw sales fall 12 per cent to Rs 228 crore. While sales were marginally lower than the Rs 84.2 crore in the September 2009 quarter, the numbers suggest an uptick in industrial activity.

The company, however, posted a sharp increase of 708 basis points in operating profit margins at 20.88 per cent. Operating profits rose 72 per cent to Rs 121 crore, helped by cheaper base oil. Prices of base oil, which peaked around $1,550 a tonne in August 2008 and later slipped to $1,100 a tonne in December 2008, are hovering at $900-925. That apart, steps for innovating new formulations (including finding substitutes for inputs) and cost management helped improve margins.

Operating profit margins would have been better but for the one-time cost of readjusting the company’s BikeZone channel. These are included in other expenditure, which surged 82 per cent to Rs 96 crore during the quarter.

For the year ended December 2009, net sales were higher by 5 per cent at Rs 2,318 crore, while net profit surged 45 per cent to Rs 381 crore (earnings per share of Rs 30.82). With economic activity picking up, analysts expect volume growth for the industry to improve and Castrol to do better. Margins, however, may not improve further, given that base oil prices have been inching up recently. At Rs 654, the stock trades at 21.2 times its 2009 earnings per share.
source - BS

Castrol India Ltd (updated - 17 April 2010)
Castrol India reported first quarter CY2010 (ending March 31st 2010) results with a 53.6 per cent yearon-year jump in net profit to Rs 117 crore. In a clear parallel to the booming auto sales in India, the lubricant manufacturing and marketing company saw sales rise 26.9 per cent yearon-year to Rs 750.7 crore in the quarter, with auto and industrial lubricant sales increasing 29 per cent year-on-year.

Sale volumes were distinctly higher at 54.6 million litres sold this quarter compared with 45.2 million litres in the first quarter of CY2009. Although not directly comparable, given seasonality of demand, volumes have grown 6.35 per cent sequentially as well, which is significant given that Q2 and Q4 are the best quarters as per calendar year, according to Kotak Institutional Equities. It adds that a price rise in January 2010 has improved realisations this quarter, which averaged at Rs 120.10 per litre compared with Rs 112.5 per litre in 1QCY09.

The price of base oil, a key input, had declined during the first half of last year, leading to strong operating profit margins of 32 per cent in June 2009 quarter. But, as its price rose, it impacted Castrol’s margins that fell in subsequent quarters of September 2009 (26.7 per cent) and December (21.5 per cent).

The hike in product prices, favourable trend in costs of raw materials and better revenue mix (premium products) have led to a sharp improvement in operating profit margins in the March 2010 quarter.

These were up by 413 bps year-on-year and 725 basis points sequentially to 28.76 per cent. A 21.7 per cent year-on-year decrease in employee expenses after a restructuring exercise, where employee headcount was cut by 10 per cent in 2008, has also helped boost margins as also a mark-to-market provisioning of retirement funds, analysts say.

Going ahead, a stronger rupee outlook will also boost margins, which will otherwise feel the impact of higher crude oil prices on raw material costs. The company also hasn’t passed through the import duty hikes of 10.3 per cent on base oils outlined in the Budget as price hikes, which could pinch margins. However, alongside a healthy demand scenario, the low base should continue to boost sales volume growth rates till the end of the year.

The stock, which has outperformed the Sensex by about 22 per cent in the last three months, closed 2.5 per cent higher at Rs 389 on Friday. At current levels, it trades at a fairly expensive valuation of 19 times consensus analyst CY2012 EPS estimates of Rs 20.33.

Robust demand and a low base point to strong earnings growth for the lubricants company
source - business standard

Disclaimer: Information presented on this site is a guide only. It may not necessarily be correct and is not intended to be taken as financial advice nor has it been prepared with regard to the individual investment needs and objectives or financial situation of any particular person. Stock quotes are believed to be accurate and correctly dated, but www.daytradingshares.com does not warrant or guarantee their accuracy or date.
www.daytradingshares.com takes no responsibility for any investment decisions based on recommendations provided on website.
Financial contents like Technical charts, historical charts and quotes are taken from NSE and Yahoo sites.
Note - All quotes are delayed by 15 minutes and unless specified.

Google Adsense Ads are posted on every page of the website so visitors clicking on Ads and going to those links and carrying any financial deal is not at all related to www.daytradingshares.com and any financial deal should be done on their own sole responsibility.
Please read at www.daytradingshares.com/disclaimer.php before using any material or advice given at www.daytradingshares.com
Copyright © 2010 DayTradingShares.com. All Rights Reserved