Castrol India Ltd (CASTROLIND) Q2FY27 Concall Transcript - Sep-2026 Qtr
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Moderator: Ladies and gentlemen, welcome to a 3Q and 9M earnings conference call for Castrol India Limited. Please note that all participant lines will be in the listen-only mode and you can ask your questions after the opening statements. If you need assistance during the call, please press star then zero on your touchtone phone to reach the operator. Please note that this call is being recorded. Also, please note that this conference call may contain certain forward-looking statements which are based on the belief, opinions, and expectations of the company as on date of this call. These statements are not the guarantee of future performance and involve risks and uncertainties that are difficult to predict. We have with us today Mr. Saugata Basu Ray, Managing Director, Castrol India Limited, and Ms. Mrinalini Srinivasan, Chief Financial Officer, Castrol India Limited. I now hand the conference over to Mr. Basu Ray for his opening remarks. Thank you and over to you, sir.
Saugata Basu Ray (Castrol India Ltd): Thank you, and good afternoon and namaskar to everyone. Thank you for joining Castrol India's analyst call for the third quarter and 9 months ending 30th September 2026. As a reminder, we follow the calendar year for financial reporting. I'm joined today by my colleague Mrinalini Srinivasan, our Chief Financial Officer and whole-time director. In a quarter marked by a sharp rise in raw material costs and adverse currency movements, we delivered a resilient performance with revenue up 27% year-on-year. While third quarter profits were down 23% year-on-year, over the 9 months, revenue has grown by 20% to ₹5,151 crores, EBITDA is up by 11%, and profit after tax has risen by 9%. As we flagged in our last call, the increase in input cost flowed through in the third quarter. The pricing actions that we took early in the year in anticipation of the raw material inflation helped moderate the impact of on margins, and we have held market share across categories. I would add that our business should not be read sequentially as the second quarter is traditionally our strongest quarter driven by seasonal demand from agriculture and the associated movement of goods, which we catch up in the freight and commercial vehicles business. We have we have focused on recovering margins and investing in our growth engines even as we managed near-
Saugata Basu Ray (Castrol India Ltd): cost pressures. We kept investing in our infrastructure in rural India, building out the industrial business, which delivered another quarter of double-digit volume growth. So, let me just highlight five areas that define our quarter. The first is about distribution reach. We expanded our national footprint to approximately 167,000 outlets, including 46,000 of those outlets which are in rural small town India. Auto Care, which is a adjacent business that we introduced a few years back, is now available across 50,000 physical stores and is doing very well on e-commerce and modern trade. Our service ecosystem now includes about 870 Castrol Auto Service centers, 37,000 independent bike workshops, and 16,000 multi-brand workshops, while our Rural Service Express has expanded to over 1,000 locations. Customer growth in the industrial business has been strong. This business continues to grow double-digit. In the full year, nine in the nine months that have followed, we have added close to 400 customers net, and that has been helped us generate new business as well as drive the top line growth. We have also launched Magna CTX, a range of circulating oils designed for demanding industrial lubricant applications. We have also localized a lot of our products, and this is in pursuit of getting better control on our raw material costs. We've brought along new products such as Hysol 35 XBB, Alusol 61 XBB, boron-free metalworking fluids which is designed for industrial machines. On the brand side, we strengthened Castrol MAGNATEC proposition of non-stop protection even before you start, highlighting how the molecules inside the inside this product inside this product protect critical engine parts. Meanwhile, our Freedom to Ride communities program for bikers continues to move across cities, Mumbai, Pune, and Hyderabad, in the quarter that went by. Our Super Mechanic program celebrates the graduation day of mechanics who have received certification and training. They have been certified by ASDC, India's first Sector Skill Council for the automotive industry. Fast Scan platform has now got verified mechanics mechanics who who have confirmed their identity to Castrol, which is up almost 100 to 180,000, which is 24% more than last year at the same time. We showcased our industrial lubricants business and our heavy-duty solutions across various platforms, such as CONEXPO and bauma, alongside large machine tool and industrial exhibition customers. We also had some accolades in this particular quarter. Noteworthy among them was the ET Brand Equity Award. We were also ranked in the top 10 supply chain planning champions and seventh, placed seventh in Supply Chain Excellence, by the Institute of Supply Chain Management. Our Silvassa and Paharpur facilities won gold at the regional chapter of the Convention on Quality Concepts, recognizing improvements in operational efficiency and manufacturing. These actions reinforce our strategy, premiumize the portfolio, go deep in distribution, urban and rural markets, build a strong service ecosystem, and prepare for the future of mobility. We continue to see meaningful headroom for growth in rural India, and our long-term ambition is to evolve from a lubricants company to a broader mobility solutions and maintenance partner. Our industrial business is growing is a growing part of this story. Its double-digit volume growth this quarter, together with new customer additions across sectors, reflects the strength of our technical expertise, our advanced solutions, and the trust of customers placed on us. With that, I will hand over to Mrunalini to take you through the financial performance, the drivers of the quarter, and our perspective on what comes next. Mrunalini, over to you.
Mrinalini Srinivasan (Castrol India Ltd): Thank you, Satyabrata, and good afternoon, everyone. For the third quarter of 2026, revenue from operations was 1,735 crores, up 27% year-on-year, down 7% sequentially. EBITDA was 262 crores, down 19% year-on-year and 47% sequentially. This translates to an EBITDA margin of approximately 15% for the quarter. Profit after tax was 176 crores, down 23% year-on-year and 49% sequentially. Important to look at these numbers on a nine-month basis. For the nine months, revenue for from operations was 5,151 crores, up 20% year-on-year. EBITDA was 1,086 crores, up 11% year-on-year, supported by the pricing actions we took early on in the year. EBITDA margin is
Mrinalini Srinivasan (Castrol India Ltd): 1% for the nine months period. Profit before tax was 1043 crores, up 10%, and profit after tax was 766 crores, up 9%. Revenue growth in the quarter was supported by the pricing actions we took early in the year. Sequentially, our performance is lower, largely because of seasonality and timing. As Shovoto mentioned, the second quarter is traditionally our strongest, driven by seasonal demand from agri. In addition, as we said on our last call, cost escalations flowed through to the P&L with a little bit of a lag, and we expected some of those to land in this third quarter. Increases in commodity and input costs, along with the broader inflationary pressures, began flowing in towards the end of second quarter and became more visible in the third with high double-digit commodity inflation. Adverse currency movement added further pressure. Pricing helped moderate this impact, and we held market leadership while we continue to invest in the levers as Shovoto mentioned, rural distribution and industrial business of our, of our brand. I would like to offer some context on margins. Across the industry, higher prices are lifting revenues and will make percentage margins appear softer for some time, while unit profit margin, unit profitability margin remains intact. In this time of extreme volatility, for us, margin per liter is the true me- measure, and on that basis we have fully absorbed cost inflation. Margins are steady to slightly higher. Protecting margins per liter will remain our priority. Looking ahead, we expect the operating environment to remain volatile and inflationary. Overall volumes may remain soft in the short to medium term. However, our growth engines, rural and industrial, continue to grow, and we expect these to grow ahead of the market. We will continue to monitor input costs, currency, pricing, and demand closely and act with agility to manage margin pressure in the medium term. Our focus remains on recovering margins, disciplined execution, careful cost management, resilient supply, and sustained investment in long-term competitiveness. I hand it back to you, Shovoto, for your closing remarks.
Saugata Basu Ray (Castrol India Ltd): Thank you, Mrinalini. To summarize, we delivered a resilient third quarter and maintained our growth momentum over the nine months of this year. Despite a sharp raw material inflation and adverse currency movements, early pricing actions helped protect our margins per liter. Our market share remains steady, and our industrial business continues to deliver double-digit volume growth. We also continue to build the business for the future through innovation, deeper distribution, strong service capabilities, and a disciplined investment frame. As we communicated in August, we expect the operating environment to remain volatile and inflationary in the medium term. We will continue to move with agility and pace to manage margin pressure through pricing and cost actions, while remaining focused on our goal of growing market share in every segment that we operate in. Our priorities remain unchanged. It'll be operational excellence, driving brand strength through innovation, and continuing to build our distribution infrastructure. These fundamentals position us well to navigate the near-term and deliver sustained long-term growth. Thank you once again for joining us. Mrinalini and I will now be happy to take your questions. Operator, please open the floor for discussions.
Moderator: Thank you very much. We will now begin the question-and-answer session. If you wish to ask a question, please press star and one on your touch-tone telephone. If you wish to withdraw yourself from the question queue, please press star and two. Participants are requested to use handsets while asking a question. Also, in lieu of time, we will stick to two questions per person. If you have further questions, kindly rejoin the queue. Ladies and gentlemen, let us wait for a moment while the questions come in.
Moderator: Ladies and gentlemen, that concludes the conference call for today. We thank you all for your participation and you may now disconnect. your lines. Thank you.
Moderator: We'll take our first question from the line of Sukrit D. Patil from EyeSight FinTrade. Please go ahead.
Sukrit D. Patil (EyeSight FinTrade): Good afternoon to the team. I have two forward-looking questions. My first question to Mr. Basu Ray is, given our strong 27% top-line growth but declining net profit this quarter, what is our volume guidance across automotive and industrial verticals for the next two quarters? And what forward strategies are in place to balance competitive pricing with market share defense while managing raw material cost volatility? That's my first question. I'll ask the second question after this. Thank you.
Saugata Basu Ray (Castrol India Ltd): Yeah. Thank you for your question. Let me begin by saying that we remain focused on the long-term objective, which is to gain market share and build volume. So, that remains unchanged. However, the operating environment has been unprecedented with a 60-plus percent increase in raw material bill in the quarter that went by. Some of it we anticipated, and therefore we took strong pricing actions beginning of the year. We will keep watching those movements on raw material price, commodity price movement, as well as foreign exchange impact. And we'll balance the pricing action to make sure that consumers are able to digest that price change because we want to enable them to come to the new price table which are which are being driven now across the industry. And at the same time, whatever we're doing in terms of investment through infrastructure of through growth of our distribution network, as well as in brand innovation, that helps the consumers appreciate the value of the Castrol brand and move to the new price table. In the we are not giving a guidance for the next few months because it's unprecedented in terms of the raw material price movement, right? I can only say that we will operate the business in the medium term within EBITDA frame of 21% to 24%. And within that frame, we will we will keep investing the busi- in the brand to grow the volume and gain market share.
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