Castrol India Stock Rallies After Strong Q4 Results, Announces ₹9.50 Dividend

Castrol India’s stock surged for the third consecutive session after reporting strong Q4 results, with revenue rising 7% YoY to ₹1,354 crore and PAT up 12% to ₹271 crore. The company announced a ₹9.50 per share dividend, though concerns remain about its sustainability due to high payout ratios. Motilal Oswal maintained a ‘Buy’ rating with a target price of ₹260, citing strong market prospects and gradual EV adoption.

CONTENTS:

• Castrol India Share Price Extends Rally for Third Consecutive Session Post-Q4 Results
• Motilal Oswal Recommends ‘Buy’ on Castrol India, Sets Target Price at ₹260
• Castrol India (NSE: CASTROLIND) Announces Increased Dividend for Shareholders

Castrol India Stock Rallies After Strong Q4 Results, Announces ₹9.50 Dividend

Castrol India Share Price Extends Rally for Third Consecutive Session Post-Q4 Results

Castrol India Stock Rallies After Strong Q4 Results: Castrol India’s stock continued its upward momentum for the third straight trading session, surging by 6% on Thursday. The stock reached an intraday high of ₹206.90 per share, fueled by strong fourth-quarter earnings reported earlier in the week.

Strong Q4 Performance Drives Stock Gains

Following the release of its Q4 financial results on Monday, Castrol India has seen a steady rise in its share price. The company follows a calendar year for financial reporting (January to December) and reported a notable increase in operational revenue for the fourth quarter (October to December 2024). Revenue for the quarter stood at ₹1,354 crore, marking a 7% rise compared to ₹1,264 crore in Q4 2023.

The company also recorded a 12% year-on-year growth in profit after tax (PAT), reaching ₹271 crore in Q4 2024, up from ₹242 crore in the same period the previous year.

Final Dividend Announcement

Alongside its earnings report, Castrol India declared a final dividend of ₹9.5 per share, which includes a special dividend of ₹4.5 per share, on a face value of ₹5 per share.

“The Board of Directors has recommended a final dividend of ₹9.5 per share for the financial year ending December 31, 2024, subject to shareholder approval at the 47th Annual General Meeting. The record date for determining eligible shareholders is set for Tuesday, March 18, 2025, and if approved, the dividend will be paid by Wednesday, April 23, 2025,” the company stated in a stock exchange filing.

Full-Year Performance and Future Outlook

Castrol India Stock Rallies After Strong Q4 Results For the full year ending December 31, 2024, Castrol India reported total revenue of ₹5,365 crore, reflecting a 6% increase from ₹5,075 crore in 2023.

Kedar Lele, Managing Director of Castrol India, highlighted the company’s progress in 2024, emphasizing innovations in key product categories and market expansion efforts.

“Castrol EDGE has continued to set benchmarks in high-performance car lubricants, while CRB TURBOMAX+ CK4 has enhanced performance for India’s trucking fleet. Our industrial solutions have also advanced in rust protection technology,” Lele said.

Looking ahead to 2025, the company aims to strengthen its market position by focusing on quality products and services for both automotive and industrial sectors. A key milestone for the year includes the relaunch of ACTIV, Castrol India’s flagship brand, in Q1. The company also plans to expand its presence in rural markets and introduce innovative service offerings to enhance accessibility and affordability for customers.

“With a strong focus on customer needs and resilient manufacturing, we aim to reinforce our leadership in the industry,” Lele added.

Motilal Oswal Recommends ‘Buy’ on Castrol India, Sets Target Price at ₹260

Castrol India Stock Rallies After Strong Q4 Results Motilal Oswal has expressed a bullish stance on Castrol India, issuing a ‘Buy’ recommendation with a target price of ₹260 in its research report dated February 4, 2025.

Strong Q4 Performance and Market Outlook

Castrol India’s EBITDA for Q4 CY24 exceeded expectations, with an EBITDA margin of 27.8%, significantly higher than the estimated 21.7%. The company reported quarterly volumes of 59 million liters, aligning with expectations.

The management emphasized its focus on strengthening brand presence, expanding distribution channels, and introducing new products, which are expected to drive volume growth and market share expansion.

They also highlighted a positive long-term outlook for India’s lubricant market, citing the country’s relatively low car penetration as a key factor supporting sustained demand until at least the late 2030s or early 2040s. While electric vehicle (EV) adoption presents a challenge, the transition is expected to be gradual, allowing Castrol to maintain its market position.

Investment Outlook

Motilal Oswal has retained its valuation multiple at 26x, with historical averages ranging between 22.4x and 29.6x. Based on these metrics, the brokerage has reaffirmed its target price of ₹260 for Castrol India and reiterated its ‘Buy’ rating.

Castrol India (NSE: CASTROLIND) Announces Increased Dividend for Shareholders

Castrol India Stock Rallies After Strong Q4 Results Castrol India Limited (NSE: CASTROLIND) has declared an increased dividend for its shareholders, raising the payout to ₹9.50 per share, up from last year’s dividend. The dividend will be distributed on April 23, 2025, offering a yield of approximately 4.4%, providing investors with a substantial return.

Sustainability of Dividend Payments

While the higher dividend is attractive, concerns remain about its long-term sustainability. The most recent dividend accounted for a significant portion of the company’s earnings and represented 88% of its free cash flow. This suggests that Castrol India prioritizes shareholder returns over business expansion, though the payout remains within a manageable range.

Looking ahead, the company’s earnings per share (EPS) are projected to grow by 30.2% over the next year. However, if the dividend payout remains on its current trajectory, the payout ratio could rise to 114%, potentially straining the company’s financial stability.

Consistent Dividend History

Castrol India has a strong track record of stable dividend payments. Since 2015, the annual dividend has grown from ₹3.50 to ₹8.50, reflecting a compound annual growth rate (CAGR) of approximately 9.3%. The absence of major dividend cuts over this period enhances investor confidence in the company’s commitment to returning value to shareholders.

Growth Limitations and Future Prospects

Despite its consistent dividend history, Castrol India’s earnings per share have only grown at an average rate of 2.3% per year. The company is distributing a significant portion of its profits as dividends rather than reinvesting in expansion. While this approach benefits income-focused investors, it may limit the company’s long-term growth potential.

Final Thoughts

Although Castrol India’s increasing dividend is positive for shareholders, concerns about sustainability and growth prospects make it less attractive as a long-term income stock. The high payout ratio could pose financial challenges in the future.

For investors seeking consistent dividends, it is essential to assess the company’s financial health and future growth potential before making investment decisions.