Castrol India Reports 22.6% Decline in Q3 Net Profit as Raw Material Costs Surge

Castrol India has reported a 22.6 percent decline in its net profit for the July–September 2026 quarter, dropping to ₹176.37 crore from ₹227.80 crore in the corresponding period of the previous year. The company follows a January–December financial year.

Despite the profit contraction, revenue from operations rose 27.3 percent to ₹1,734.72 crore, compared to ₹1,362.75 crore a year ago. However, earnings before interest, tax, depreciation, and amortisation (EBITDA) declined 18.8 percent to ₹262.04 crore from ₹322.80 crore.

Managing Director Saugata Basuray noted that the company faced a sharp rise in raw material costs and adverse currency movements during the quarter, though early pricing actions helped moderate the impact on margins. Chief Financial Officer Mrinalini Srinivasan added that the operating environment is expected to remain volatile and inflationary, and management will continue to manage margin pressures through pricing and cost actions.

The margin pressure was primarily driven by a 70.8 percent surge in raw and packing material consumption, which rose to ₹1,085.86 crore from ₹635.79 crore. This lifted material costs to 62.6 percent of revenue, compared to 46.7 percent a year earlier. Consequently, the EBITDA margin contracted by approximately 860 basis points to 15.1 percent from 23.7 percent. Total expenses increased 41 percent to ₹1,504.74 crore, outpacing revenue growth.

When compared sequentially with the April–June 2026 quarter, net profit fell 49.3 percent from ₹347.70 crore, while revenue declined 7.3 percent from ₹1,871.47 crore. For the broader January–September 2026 period, however, net profit stood at ₹766.25 crore, marking an 8.6 percent increase from ₹705.26 crore a year earlier. Revenue for the nine-month period grew 20.3 percent to ₹5,151.43 crore, and EBITDA increased 11 percent to ₹1,086 crore.

On the operational front, Castrol’s industrial business recorded double-digit volume growth, adding 700 customers across automotive, machinery manufacturing, metals, aerospace, and sugar industries. The company's distribution network expanded to reach approximately 1.67 lakh outlets, which included 46,000 rural outlets. Auto-care products were distributed through about 50,000 physical outlets, while its service footprint included over 870 Castrol Auto Service centres and more than 1,000 Rural Service Express locations.

The financial results coincide with a major ownership development. BP is preparing to sell a 65 percent controlling stake in its global Castrol lubricants business to investment firm Stonepeak in a transaction valued at approximately $10 billion. The deal would grant Stonepeak indirect control of Castrol India, in which UK-based Castrol Limited holds a 51 percent stake.

The proposed change in control has triggered a mandatory open-offer process for Indian shareholders. Stonepeak and its partners have proposed acquiring up to 26 percent of Castrol India’s shares at an initial price of ₹194.04 apiece, representing a potential outlay of approximately ₹4,990 crore. Castrol India will remain listed unless a separate delisting process is initiated, and its existing operations remain unaffected while the transaction awaits regulatory approvals, with completion targeted by the end of 2026.

"Castrol India's Q3 performance highlights the delicate balance mature enterprises must maintain between top-line growth and input cost management during inflationary periods. While revenue expanded by over 27 percent, a 71 percent surge in raw material costs demonstrates how rapidly external commodity pressures can compress operating margins. Furthermore, this financial recalibration unfolds alongside a significant global ownership transition involving Stonepeak, making agile cost controls and strategic pricing vital as the company navigates its next phase of corporate restructuring." — Dr. Shishir Gupta, Founder & CEO, StartupLanes