Castrol India Shares Soar as Saudi Aramco Eyes BP’s Lubricants Business in $10 Billion Deal!

Castrol India shares surged up to 10.59% amid reports of a potential acquisition by Saudi Aramco, following BP’s strategic review of its Castrol lubricants business, valued at around $10 billion. Aramco is considering integrating Castrol’s assets with its Valvoline lubricants division, which it acquired in 2023, as part of its global expansion strategy. BP plans a $20-billion divestment, including Castrol and renewable energy firm Lightsource BP, to streamline operations.

Castrol India, a market leader with three manufacturing plants in India, reported strong Q4 financials, with a 12% YoY profit increase to ₹271 crore, 7% revenue growth to ₹1,353 crore, and a 14% rise in EBITDA to ₹375 crore. The company announced a ₹9.5 per share dividend, including a ₹4.5 special dividend, reinforcing investor confidence.

The stock has gained over 28.56% in the past month, reflecting strong market optimism. Meanwhile, Aramco has been expanding globally, recently acquiring stakes in Chile’s Esmax and Pakistan’s Gas and Oil. Its venture arm, Prosperity7 Ventures, is also exploring investment opportunities in India’s startup ecosystem, further strengthening Aramco’s foothold in high-growth markets.

Castrol India Shares Soar as Saudi Aramco Eyes BP’s Lubricants Business in $10 Billion Deal!

Castrol India shares surged nearly 6% on Thursday, reaching ₹235.50 on the BSE, following reports that Saudi Aramco is evaluating a potential acquisition of BP’s lubricants business, which includes Castrol. According to Bloomberg, Aramco may integrate Castrol’s assets with its Valvoline division, acquired in 2023 for $2.65 billion. BP has initiated a strategic review of Castrol, previously valued at $10 billion, as part of a broader corporate restructuring. Castrol India’s stock rose 10.59% to ₹245.85 during the session, making it one of the top five gainers on the BSE. The stock has gained 8% in the past month and 12% year-to-date, while over the past two years, it has surged by an impressive 97%.

Saudi Aramco’s Expansion Strategy

If Aramco proceeds with the acquisition, it could significantly strengthen its footprint in high-growth markets like India, China, and Southeast Asia. The Saudi oil giant has been aggressively expanding its global presence, particularly in the refining and chemicals sector. Recently, Aramco completed the acquisition of a 100% stake in Esmax (Chile) and a 40% stake in Gas and Oil Pakistan in 2024. It has also been actively investing in India’s energy and lubricant sector, with a focus on long-term growth opportunities.

Aramco’s potential move to acquire Castrol aligns with its strategy to expand its downstream operations and diversify revenue streams beyond crude oil sales. By integrating Castrol with its Valvoline business, Aramco could create a more competitive and diversified lubricants portfolio, leveraging Castrol’s strong brand recognition and market leadership in India.

BP’s Strategic Review and Divestment Plans

BP’s decision to conduct a strategic review of Castrol is part of its broader $20-billion divestment strategy aimed at streamlining operations and reducing net debt, which stood at $23 billion at the end of Q4 2024. The company’s plan to divest non-core assets, including its renewable energy subsidiary Lightsource BP, is designed to enhance profitability and focus more on core oil and gas operations. Proceeds from these sales will help BP achieve its financial targets and strengthen its balance sheet.

BP’s CEO, Murray Auchincloss, has previously emphasized that optimizing the company’s asset portfolio will enable it to generate higher returns for shareholders while continuing to invest in energy transition projects. Given Castrol’s strong market presence and profitability, a sale could attract multiple bidders, aside from Aramco, looking to capitalize on the brand’s robust distribution network and established customer base.

Castrol India’s Market Leadership & Growth Strategy

Castrol is one of the top three lubricant brands globally and holds a dominant position in India. The company operates three manufacturing plants in India, including one in Bengal, and has a well-established network of distributors and retailers. It has been focusing on strengthening its core mobility business, expanding into industrial lubricants, and diversifying into emerging segments such as data center fluids and enhanced mobility services.

The company has been investing in R&D to develop high-performance lubricants that cater to the evolving needs of electric vehicles (EVs) and other next-generation automotive technologies. As the Indian automobile industry transitions towards cleaner energy solutions, Castrol aims to position itself as a key player in providing advanced lubricant solutions for hybrid and electric vehicles.

Technical Analysis and Stock Performance

Market analysts see a bullish trend in Castrol India’s stock, with strong indications of a reversal after a 42% decline over 22 weeks. The stock has now formed a 34-week double bottom, signaling a potential long-term uptrend. It is currently trading above its 50% retracement level of ₹223, reinforcing investor confidence.

Anshul Jain, Head of Research at Lakshmishree Investment and Securities, stated that the stock’s recent performance suggests strong buying interest at lower levels, with volume trends confirming a bullish outlook. He further noted that any dips toward ₹220 could present a buying opportunity for investors looking to accumulate shares at attractive levels.

Financial Performance and Investor Sentiment

For the December quarter, Castrol India reported a 12% year-on-year (YoY) increase in net profit to ₹271 crore, marking a 30% rise from the previous quarter. Revenue grew 7% YoY and 5% sequentially to ₹1,353 crore, while EBITDA surged 14% YoY to ₹375 crore, reflecting a 31% jump from the previous quarter. The EBITDA margin expanded by 170 basis points YoY and over 550 basis points quarter-on-quarter, reaching 27.7%, indicating strong operational efficiency.

The company announced a dividend payout of ₹9.5 per share, which includes a special dividend of ₹4.5 per share, reflecting management’s confidence in sustained profitability.

At the end of the December quarter, BP held a 51% stake in Castrol India through its subsidiary, Castrol Ltd., making it the controlling shareholder. Institutional and retail investors have also shown keen interest in Castrol India, given its consistent earnings growth and leadership in the lubricant sector.

Conclusion

The potential Saudi Aramco acquisition of BP’s Castrol business has sparked significant investor interest, leading to a sharp rally in Castrol India shares. While discussions remain at an early stage, the deal, if finalized, could reshape India’s lubricant market and expand Aramco’s footprint in key global regions. With Castrol’s strong market presence, solid financial performance, and growth-focused strategy, the company remains a key player to watch in the coming months. Investors will be closely monitoring further developments, including any official statements from BP or Aramco regarding the deal’s progress.