We Are Trying To Balance Topline Growth With Bottomline Growth: Castrol India | CNBC TV18

Summary

In an interview, Mr. Sandeep Sangan, Managing Director of Castrol India, discusses the company's performance with muted Q2 results, revealing a 5% revenue growth and a 3% rise in PBT. He emphasizes Castrol's focus on balancing topline and bottom line growth, with investments in branding and new product launches like the Castol Edge portfolio. Sangan also highlights the potential of data center thermal management, where Castrol is investing in R&D for immersion cooling technologies, although the timeline for market implementation remains uncertain.

Takeaways

• 📈 Castol India's stock has performed well this year, but the second quarter showed low single-digit growth in revenue and flat profit margins.
• 🔑 Mr. Sandep Sangan, the Managing Director of Castol India, discussed the company's performance and future outlook.
• 📊 The company reported a 5% growth in revenue and a 3% rise in PBT in the second quarter, supported by brand investments and a new campaign featuring Shah Rukh Khan.
• 💡 Historically, Castol's topline growth has been around 2-3%, and the company is now focusing on balancing topline and bottom line growth.
• 🚀 Castol India launched new products in the second quarter, including Castol Edge for SUVs, hybrids, and European cars, which is a top-performing product globally.
• 📚 The company's volume growth was in line with revenue growth, and they aim to grow a couple of points ahead of the market, which is growing at about 4-5%.
• 🌐 Castol India is expanding its auto care range of products, which are now available in 45,000 outlets, aiming to scale the business further.
• 💰 Advertising expenses have increased by about 16% in the first half of the year, which is part of the strategy to continue building the brand.
• 🌡 The company is exploring opportunities in data center thermal management, investing in R&D for immersion cooling technologies.
• 🌐 The data center market is expected to grow, and Castol is testing and piloting its cooling products with big data center players.
• 🔮 While the data center opportunity is still in development stages, Castol sees it as a significant area for future growth and is investing accordingly.

Q & A

How has Castol India's stock performance been this year?

Castol India's stock has performed phenomenally well this year, despite the muted performance in the second quarter.

What was the revenue growth for Castol India in the second quarter?

Castol India delivered a 5% growth in revenue in the second quarter.

What was the rise in PBT (Profit Before Tax) for Castol India in the second quarter?

There was a 3% rise in PBT for Castol India in the second quarter.

What marketing campaign did Castol India launch to boost their brand?

Castol India launched a campaign featuring Shah Rukh Khan for Castol EDGE.

How does Castol India's topline growth compare historically?

Historically, Castol India's topline growth used to be in the region of 2-3%, and they are now aiming to balance topline and bottom line growth.

What new product did Castol India launch in the second quarter for specific vehicle types?

In the second quarter, Castol India launched the Castol EDGE portfolio for SUVs, hybrids, and European cars, which is a top-performance product in their global car portfolio.

What was the volume growth for Castol India's core business in Q1?

The volume for Castol India's core business, lubricants, grew by 5-6% in Q1.

What is Castol India's outlook on the core lubricants business growth?

Castol India's outlook for the core lubricants business is to continue growing at about 5-6%.

How does Castol India plan to achieve higher volume growth?

Castol India plans to achieve higher volume growth by beating category growth and adding revenues from playing in adjacencies, such as their Autocare range of products.

What is the current status of Castol India's data center thermal management opportunity?

Castol India sees data center thermal management as a big opportunity and is investing in R&D for technologies like immersion cooling, with products already available and in testing with big data center players.

How does Castol India maintain its profit margins amidst increased advertising expenses?

Castol India has maintained its profit margins at about 23-24%, and they plan to continue investing in brand building, as they believe in the long-term benefits of such investments.

What is the potential of the data center opportunity for Castol India in terms of profit margins?

While the share of volume for the data center opportunity might be low, it could potentially have a high share of profit due to its efficiency and lower energy consumption compared to traditional cooling methods.