Summary
Castrol India Limited - Q4 FY 2025 Earnings Call Summary Wednesday, February 4, 2026, 4:00 PM
Event Participants
Executives 2 Mrinalini Srinivasan (CFO & Whole-Time Director), Saugata Basuray (Interim CEO & Whole-Time Director)
Analysts 8 Dhaval Popat, Harsh (Individual Investor), Jay Shah, Keshav, Lokesh, Mandira A, Naeem Patel, Nitin Tiwari, Sabri Hazarika, Vijay Pandey, Vipulkumar Shah, Viraj Yatish Mithani
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Volume | ~64 million liters | +8% YoY; Eighth consecutive quarter of volume-led growth. |
| Revenue | ₹1,440 crores | +6.4% YoY; Highest quarter-on-quarter revenue in nearly two decades. |
| EBITDA | ₹367.2 crores | -2.3% YoY; Margin at 25.5%, impacted by FX volatility and higher input costs. |
| Profit After Tax (PAT) | ₹245 crores | -9.6% YoY; Impacted by one-time Labour Code-related changes in the prior year base. |
| FY25 Revenue | ₹5,722 crores | +7% YoY; Record annual revenue driven by 8% annual volume growth. |
| FY25 EBITDA | ₹1,348 crores | +5% YoY; Full-year margin at 24%, at the top end of management’s 21-24% guidance. |
| FY25 PAT | ₹950 crores | +2.5% YoY; Reflects healthy operational execution and product mix. |
| Dividend | ₹8.75 per share | Total FY25 payout (~91% payout ratio); Includes a final dividend recommendation of ₹5.25. |
Geographic & Segment Commentary
- Automotive Lubricants: Grew market share by 50 bps to reach the early 20% range. Focus remains on personal mobility (Castrol MAGNATEC and Activ) and commercial vehicles, supported by a distribution network of 150,000+ outlets.
- Industrial Segment: Delivered double-digit volume growth, now contributing 12-13% of total revenue. Strategic focus includes localized innovation in Hysol, Alusol, and Spheerol ranges to support government-led manufacturing initiatives.
- Rural Market: Scaled reach to over 40,000 rural outlets and 500 Rural Service Express points. Rural distribution continues to deliver double-digit growth, outperforming urban segments due to rising two-wheeler penetration.
Company-Specific & Strategic Commentary
- Innovation and Localization: Localized ~20 products in 2025, including premium industrial grades and the MAGNATEC car range. Launched India’s first Renewable Re-Refined Base Oil (RRBO) for BS-VI engines.
- Strategic Partnerships: Forged new collaborations with Triumph Motorcycles (POWER1) and signed an MOU with VinFast Auto India for EV aftersales service.
- Parent Company Structure: BP (parent) announced a JV where it retains 35% stake while a new investor takes 65%. Management maintains this is “business as usual” with no immediate impact on brand licensing or R&D support.
- Supply Chain Agility: Exploring a base oil RRBO ecosystem through an MOU with HPCL to solve last-mile collection challenges.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Volume Growth | 1.5x to 2x Market Growth | Target range of 3.5%-4% growth; assumes sustained demand in personal mobility and industrial sectors. |
| EBITDA Margin | 21% to 24% | Long-term sustainable range; allows for investment in brand building and distribution expansion. |
| Capex | ~₹100 crores annually | Split between plant capacity/innovation (50%) and distribution/market assets (50%). |
Risks & Constraints
| Risk | Context |
|---|---|
| Input Cost & FX | Base oil is a dollar-linked commodity; sharp currency movements (USD/EUR) in Q4 led to a ~200 bps YoY EBITDA margin compression. |
| EV Transition | While currently low (5-6% car penetration), EV growth reduces lubricant volume per unit, though immersion cooling fluids offer a higher-value play. |
| Competitive Intensity | High intensity in the retail segment requires sustained 3% revenue spend on A&P to maintain market share. |
Q&A Highlights
Margin Compression
- Question: What caused the 200+ bps YoY decline in Q4 EBITDA margins? (Keshav)
- Answer: Primarily macroeconomic headwinds including steep FX exposure (USD/EUR) and input cost inflation. Structurally, the higher growth in the industrial segment (lower margin than auto) also contributed to the mix dilution (Mrinalini Srinivasan).
Data Center Opportunity
- Question: What is the roadmap for the immersion cooling/data center business? (Nitin Tiwari, Viraj Mithani)
- Answer: Currently in the pilot stage with “hyperscalers” in India. Growth will be rapid on a small base, but materiality is 4-5 years away as the industry shifts from air cooling to liquid immersion technology (Saugata Basuray).
Parent Company De-staking
- Question: How does BP selling a 65% stake in the global business affect Castrol India? (Lokesh)
- Answer: The transaction involves BP retaining 35% and is subject to regulatory approvals. In India, it remains business as usual, and the company continues to focus on its independent growth strategy (Saugata Basuray).
Base Oil Sourcing
- Question: Can domestic sourcing from PSUs like IOC protect margins? (Dhaval Popat)
- Answer: While local sourcing (currently ~50%) saves on freight and lead times, base oil remains a global commodity priced in dollars, so it does not provide a hedge against FX volatility (Mrinalini Srinivasan).
Key Takeaway
Castrol India delivered a record performance in FY 2025, marked by its eighth consecutive quarter of volume-led growth and highest-ever annual revenue of ₹5,722 crores. While Q4 margins faced pressure from currency volatility and input costs (EBITDA margin at 25.5% vs 27.8% YoY), the company maintained its leadership in automotive lubricants, gaining 50 bps in market share. Strategic focus remains on diversifying the revenue mix, with the industrial segment now contributing 12-13% and rural distribution scaling to 40,000 outlets. Management continues to position the company for the energy transition through EV fluid partnerships with OEMs like VinFast and pilot programs for data center immersion cooling. Looking ahead, Castrol aims to outpace market growth by 1.5x-2x while maintaining healthy EBITDA margins in the 21-24% range, supported by a robust dividend payout policy of ~90%.
Want more insights like this?
Subscribe to get deep dives delivered to your inbox.
More Earnings Summaries
Explore more Q3 FY26 earnings call analyses: