Castrol India (CSTRL)
Energy
Volumes versus margins. Castrol reported 2QCY12 net income at `1.21 bn (-15.2%
yoy, -1.6% qoq), lower than our estimate of `1.29 bn. The sequential improvement in
sales volume to 56.7 mn liters (+7.8% qoq) has been largely negated by a sharp increase
in operating costs. We reiterate our SELL rating on Castrol stock noting (1) expensive
valuations at 27.3X CY2012E EPS and 25.2X CY2013E EPS and (2) potential downside
of 23% to our revised target price of `425 (`400 previously).
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link : http://www.kotaksecurities.com/pdf/indiadaily/indiadaily17072012mv.pdf
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