Motilal Oswal Financial Services

6 May 2021

Annual Report Update | Sector: Oil & Gas

Castrol (India)

Buy

BSE SENSEX

48,950

S&P CNX

14,725

CMP: INR125

TP: INR170 (+36%)

Demand to revive as economy opens up

Castrol India (CSTRL)’s CY20 performance remained largely unhindered by declining IIP

levels and muted customer off-take, with the company delivering a resilient performance

for the year. Here are the key insights from CSTRL’s CY20 Annual Report:



CSTRL’s gross profit declined 19% in CY20 (v/s CY19) due to lower volumes, weighed

by disruptions caused by the pandemic and economic slowdown.



Operating and other expenses fell by INR600m in CY20, driven by the company’s

judicious cost management and efficiency programs – which led to robust working

capital management.



In CY20, CSTRL reported PAT decline of ~30% YoY amid the pandemic (against PAT

CAGR of ~8% over CY10-19). Building on its positive long-term outlook, the company

continues to drive growth in the personal mobility segment on the back of its wide

distribution reach and strong brand building. We reiterate buy and value the stock at

20x CY22E EPS to arrive at a TP of INR170/share.

Stock Info

Bloomberg

Equity Shares (m)

M.Cap.(INRb)/(USDb)

52-Week Range (INR)

1, 6, 12 Rel. Per (%)

12M Avg Val (INR M)

Free float (%)

CSTRL IN

989

124 / 1.7

140 / 104

2/-5/-49

194

49.0

Continued efforts to expand product portfolio in CY20



Financials Snapshot (INR b)

Y/E Dec

2020 2021E 2021E

Sales

30.0

38.1

39.6

EBITDA

8.1

11.6

11.7

PAT

5.8

8.4

EPS (INR)

5.9

8.5

EPS Gr. (%)

-29.6

44.8

-0.2

BV/Sh.(INR)

14.3

16.0

17.7

Ratios

Net D:E

-0.9

RoE (%)

41.9

56.3

50.5

RoCE (%)

42.1

56.4

50.6

Payout (%)

93.3

80.0

Valuations

P/E (x)

21.4

14.8

P/BV (x)

8.8

7.9

7.1

EV/EBITDA (x)

13.7

9.5

9.3

Div. Yield (%)

4.4

5.4

FCF Yield (%)

6.8

6.4

Shareholding pattern (%)

As On

Mar-21 Dec-20 Mar-20

Promoter

51.0

DII

16.7

17.3

18.3

FII

11.6

12.0

11.8

Others

20.7

19.7

18.8

FII Includes depository receipts



The company continued to introduce BS VI ready products across categories in

CY20. It also launched BS VI compliant products for new next-generation cars

in the OEM space.

The focus was on manufacturing Castrol GTX SUV and the POWER1 Ultimate

range, among other products, that find use in various applications across India.

It also introduced new products such as Ilocut 1945, Iloform BWN 320,

Techniclean HP, and Rustilo DW 310 in the Industrial and HD spaces.

The company pursued growth opportunities and launched new products in

Cruiser Bikes (Castrol Activ Cruise) in CY20 as well as introduced a fully

synthetic performance oil range (Castrol POWER1 Ultimate) in the Premium

segment in 2Ws to expand its product portfolio.

Strong opportunity in Lubricants/Non-Lubricants



In CY20, the company focused on the CI4+ segment within Trucks (improved

portfolio and sustained brand-building efforts) as this is the fastest growing

segment in the Commercial Vehicles category.

CSTRL became the first company to have BS VI compliant products across

categories of automotive lubricants – as it looks to take advantage of further

enhanced technologies within this space.

In the newly launched Jio-BP retail network, the company’s lubricants were

available across over 1,350 Jio-BP sites within just six months of the alliance

(and at ~1,400 Jio-BP sites at the end of 1QCY21). The products saw good

uptake, which has ensured a much wider reach.

The company entered into a strategic collaboration with 3M Ltd in CY20 for a

range of quality vehicle-care products for the automotive aftermarket – it

seeks to diversify into categories outside of Lubricants for further growth

opportunities.

Swarnendu Bhushan- Research Analyst

(Swarnendu.Bhushan@MotilalOswal.com)

Sarfraz Bhimani - Research Analyst

(Sarfraz.Bhimani@MotilalOswal.com)

Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.

Investors are advised to refer through important disclosures made at the last page of the Research Report.

Castrol (India)

Stock Performance (1-year)

Valuation and view



The capex guidance for CY21 stands at INR800–1,000m.

CSTRL has always enjoyed brand equity in the market. It would be able to secure

its profitability with a) a better product mix, b) cost control, and c) the launch of

advanced products with better realization.

CSTRL has already launched EV fluids globally (China and Europe). In CY20, it

signed agreements with MG Motors and Tata Motors to supply EV fluids in India.

The management expects it would be another 15–20 years before a scalable EV

fleet is seen on Indian roads.

The company is looking at various revenue streams in the future. The deal with

3M is a reflection of its diversification plans into new avenues.

CSTRL is a perfect value-play candidate, with return ratios over 50% and a

dividend payout policy of over 80% (translating to dividend yield of ~5%).

On a one-year forward P/E basis, the stock trades at a discount of ~45% to its

long-term P/E average of 27.1x. Maintain Buy.

Exhibit 1: 1-year forward P/E chart; currently trades at 14.8x

P/E (x)

60.0

45.0

30.0

15.0

0.0

Avg (x)

Max (x)

Min (x)

+1SD

-1SD

43.7

33.7

27.1

14.7

20.4

14.8

Source: Company, MOFSL

Demand revival expected as economy reopens post 2

wave



Demand fell in the 2W and Passenger Lubricants categories in CY20. While it has

started to pick up in 2021, the recent second COVID wave has once again raised

uncertainty regarding the revival of the Mobility sector (with states announcing

partial to full lockdowns).

Building on its positive long-term outlook, the company continues to drive

growth in the segment on the back of its wide distribution reach, strong brand

building, and leveraging of growth in Synthetic Oils.

Despite some other short-term challenges, coupled with the 2

wave, the CV

segment is expected to grow once economic activity picks up and the number of

vehicles on Indian roads continues to rise (resulting in the second round of pent

up demand as things open up).

The government focus on investments in infrastructure is likely to drive growth

in the Construction and Off-highway sectors; this would in turn lead to growth in

lubricant demand in this category. With the Farming segment performing well,

strong lubricant demand is expected from the Agricultural sector as well.

6 May 2021

Castrol (India)

Lubricants market – A bird’s eye view



Overall vehicle sales plunged in CY20 v/s the previous year. This was largely

attributable to a tough operating environment and restricted activity in the first

half of CY20, which showed signs of recovery in the latter half.

India is the world’s third largest Lubricants market after the US and China;

consumption increased 3.7% YoY to ~2.8b liters in CY19.

On the regulatory front, the mandate that all new vehicles sold from Apr’20

must comply with BS VI emission norms was a significant development.

CSTRL operates in a highly competitive market, comprising national oil players,

several international players, and various local players.

The company operates in all the major categories, such as Automotive,

Industrial, and Marine & Energy Applications. CSTRL’s focus has always been on

Personal Mobility segment (which forms ~45-50% of total volumes; followed by

~30-35% of commercial automotive volumes and rest is industrial volumes) and

plans to continue it in the future as well.

Exhibit 2: Lubricant consumption in India up 3.7% to 2.8b liters in CY19

Lubricant consumption in India (bn ltrs)

2.6

2.0

2.1

2.2

20.9

% change

2.4

2.7

12.5

2.8

4.0

3.0

-1.0

2.0

-7.7

3.7

Source: Company, MOFSL

Exhibit 3: RM cost down 28% YoY in CY20

Raw Materials (INR mn)

-2

-17

-4

Change (%)

-8

-28

Exhibit 4: Sales volumes (per liter realization); gross margins

Volumes (in mn litres)

Gross Margin (%)

Realization (INR/ltr)

Source: Company, MOFSL

6 May 2021

Castrol (India)

Exhibit 5: EBITDA at INR8.1b, with margins at 27% in CY20

EBITDA (INR mn)

Margin (%)

Exhibit 6: Adj. PAT down ~30% YoY to INR5.8b in CY20

Adjusted PAT (INR mn)

Margin (%)

Source: Company, MOFSL

Continued

efforts to

expand product

portfolio in

CY20

6 May 2021

Castrol (India)

Related-party transactions



CSTRL had various related-party transactions during the year, for the sale and

purchase of material/traded goods and for receiving/rendering services from/to

subsidiaries.

The largest related-party transactions pertained to royalties. The company paid

INR7,927m to its parent company as a royalty. The remaining transactions were

much smaller in size – the second largest one comprised INR186m toward the

Castrol India Ltd. Employee Provident Fund.

Total payments by Castrol India to fellow subsidiaries for purchases stood at

INR525m in CY20 v/s INR745m (-30% YoY) in CY19.

CSTRL’s remuneration to Executive Directors was down 20% YoY to INR85m in

CY20 (v/s INR106m in CY19).

Payables to related parties at end-CY20 were down ~11% YoY to INR1,124m.

Receivables also declined ~34% to INR65m (v/s INR99m in CY19).

Corporate Social Responsibility



CSR spends stood at INR254m (v/s INR227m in CY18), more than required under

the provision (prescribed CSR for the year was INR226m) – accounting for 2% of

the average net profit (INR11,302m) in the past three years.

CSTRL’s vision of transforming the lives of truck drivers and mechanics towards a

sustainable livelihood and building a sense of pride for their professions has led

to the company developing and focusing on two flagship programs:



Castrol Sarathi Mitra – for the holistic development of truck drivers



Castrol Eklavya – for mechanics to strengthen their skills in the Automotive

and Industrial sectors, with a focus on technology.

R&D expenditure



R&D expenditure stood at INR53m in CY20 (~-28% YoY), of which INR2m (~-93%

YoY) was incurred on capital R&D and INR51m (~19% YoY) was toward recurring

R&D. In CY19, the total R&D spend had been INR73m.

Exhibit 7: R&D expenditure declined 28% in CY20 to INR53m v/s INR73m in CY19

Particulars (INR m)

Capital

Recurring

Total

YoY change (%)

CY17

199

250

138

CY18

-61

CY19

-25

CY20

-28

Source: Company, MOFSL

6 May 2021

Castrol (India)

Exhibit 8: Inventory days increase to 45 days in CY20 from

29 days in CY19

Inventory (Days)

Exhibit 9: Debtor days decrease to 19 days in CY20 from 39

days in CY19

Debtor (Days)

Source: Company, MOFSL

Exhibit 10: On year-end basis, WC days stood at -3 days in CY20 on increase in creditor days and decrease in debtor days

Cash conversion cycle (year-end basis)

Days

Inventory

Debtor

Creditor

Cash conversion cycle

-5

-4

-3

CY11

CY12

CY13

CY14

CY15

CY16

CY17

CY18

CY19

CY20

Source: Company, MOFSL



CSTRL paid a dividend of INR5.5/share in CY20, the same as in CY19. The payout

stood at ~93% (v/s ~79% in CY19).

EPS for CY20 came in at INR5.9/share, implying a decrease of ~30% v/s CY19; the

P/E multiple stood at 21x.

The current dividend yield is 4.4%, with RoE at 41.9%.

Asset turnover stood at 2.1x for CY20, whereas inventory days increased to 45

days from 29 days.

Exhibit 11: DPS at INR5.5/share for CY20; EPS at INR5.9 for the year

DPS (INR)

6.2

4.8

6.8

EPS (INR)

7.0

7.2

5.9

8.4

4.8

4.5

5.3

3.8

3.5

3.8

4.5

5.5

4.7

5.0

5.5

Source: Company, MOFSL



Cash Flow from Operations (CFO) increased a marginal 2% YoY to INR8, 928m in

CY20. Free Cash Flow (FCF) increased 9% YoY to INR8, 511m in CY20.

6 May 2021

Castrol (India)

Exhibit 12: Payout ratio up significantly in CY20

Payout (%)

Exhibit 13: Return ratios decline in CY20

RoE (x)

114.8

81.7

71.3 74.9 76.2

86.2

69.2 64.9 65.4

RoCE (X)

42.1

Source: Company, MOFSL

Exhibit 14: CFO up 2% to INR8.9b in CY20

CF from Operations (INR mn)

-31

-15

-10

-8

-10

Change (%)

Exhibit 15: FCF up 9% to INR8.5b in CY20

Free Cash Flow (INR mn)

-35

-13

-9

-11

Change (%)

-18

Source: Company, MOFSL



Source: Company, MOFSL

Foreign exchange earned was INR143m in CY20 (v/s INR220m in CY19), below

foreign exchange used of INR7,208m (v/s INR1,000m in CY19).

The percentage increase in the median remuneration of employees was 1.4%

for CY20 v/s CY19. The company had 690 employees as of 31

Dec’20.

The remuneration of CSTRL’s Managing Director, Mr Sandeep Sangwan stood at

~INR37m. His base salary stood at ~INR23m, while the remainder constituted

prerequisites, retirement benefits, and performance-based incentives.

Exhibit 16: Remuneration of Directors and key management personnel

Name of Director/KMP

Mr. Sandeep Sangwan

Ms. Rashmi Joshi

Mr. Jayanta Chatterjee

Mr. Uday Khanna

Mr. R. Gopalakrishnan

Ms. Sangeeta Talwar

Mr. Rakesh Makhija

Mr. Sashi Mukundan

Mr. Udayan Sen (wef 2nd April, 2020)

Mr. Ramchander Subramaniam Avanavadi

Ms. Chandana Dhar

Designation

Managing Director

Chief Financial Officer

& Whole-time

Director

Whole-time Director

– Supply Chain

Independent Director

Nominee Director

Company Secretary &

Compliance Officer

Remuneration of

Director/KMP for

FY 2020 (INR mn)

37.2

23.1

24.5

9.2

Percentage

increase in

Remuneration YoY

15.7%

7.7%

10%

Ratio to median

remuneration of

employees

18.5

11.5

12.2

4.5

Source: Company, MOFSL

6 May 2021

Castrol (India)

Financials and valuations

Standalone - Income Statement

Y/E December

Net sales

Change (%)

Gross Margin

Margin (%)

EBITDA

Margin (%)

Depreciation

EBIT

Interest Charges

Other Income

PBT bef. EO Exp.

Income tax

Tax Rate (%)

Reported PAT

Change (%)

Margin (%)

(INR M)

CY16

33,703

2.2

18,387

54.6

9,993

29.7

450

9,544

874

10,403

3,699

35.6

6,704

9.0

19.9

CY17

35,843

6.3

19,183

53.5

10,330

28.8

455

9,875

837

10,700

3,782

35.3

6,918

3.2

19.3

CY18

39,046

8.9

19,980

51.2

10,708

27.4

556

10,152

843

10,984

3,901

35.5

7,083

2.4

18.1

CY19

38,768

-0.7

21,291

54.9

11,530

29.7

697

10,833

648

11,469

3,195

27.9

8,274

16.8

21.3

CY20

29,969

-22.7

17,306

57.7

8,141

27.2

866

7,275

620

7,853

2,024

25.8

5,829

-29.6

19.5

CY21E

38,121

27.2

21,385

56.1

11,638

30.5

973

10,665

637

11,281

2,843

25.2

8,439

44.8

22.1

CY22E

39,645

4.0

21,834

55.1

11,717

29.6

1,104

10,612

657

11,259

2,837

25.2

8,422

-0.2

21.2

Standalone - Balance Sheet

Y/E December

Equity Share Capital

Total Reserves

Net Worth

Capital Employed

Gross Block

Less: Accum. Deprn.

Net Fixed Assets

Capital WIP

Curr. Assets, Loans&Adv.

Inventory

Account Receivables

Cash and Bank Balance

Cash

Bank Balance

Loans and Advances

Curr. Liability & Prov.

Account Payables

Other Current Liabilities

Provisions

Net Current Assets

Deferred Tax assets

Appl. of Funds

E: MOFSL Estimates

(INR M)

CY16

2,473

7,343

9,816

4,004

2,585

1,419

423

16,369

3,439

2,552

8,219

1,116

7,103

2,159

9,067

4,966

3,478

623

7,302

672

9,816

CY17

4,946

5,256

10,202

4,404

3,040

1,364

599

17,255

3,196

2,850

7,842

2,155

5,688

3,367

9,568

6,066

2,967

535

7,687

551

10,201

CY18

4,946

6,711

11,657

5,440

3,596

1,844

366

18,325

4,568

3,918

7,438

2,637

4,802

2,401

9,411

5,840

3,111

460

8,914

533

11,657

CY19

4,946

8,724

13,670

6,267

4,293

1,974

296

19,433

3,047

4,820

9,461

672

8,788

2,105

8,618

4,718

3,403

497

10,815

585

13,670

CY20

4,946

9,197

14,143

6,885

5,159

1,726

453

21,134

3,669

1,805

12,742

1,947

8,788

2,918

9,792

5,456

3,793

543

11,342

622

14,143

CY21E

4,946

10,885

15,830

7,885

6,131

1,753

1,000

24,442

4,451

2,296

13,983

4,529

8,788

3,712

11,987

6,619

4,825

543

12,455

622

15,830

CY22E

4,946

12,569

17,515

8,885

7,236

1,649

1,000

26,785

4,694

2,388

15,843

6,537

8,788

3,860

12,542

6,981

5,018

543

14,243

622

17,515

6 May 2021

Castrol (India)

Financials and valuations

Ratios

Y/E December

Basic (INR)

EPS

Cash EPS

BV/Share

DPS

Payout (%)

Valuation (x)

P/E

Cash P/E

P/BV

EV/Sales

EV/EBITDA

Dividend Yield (%)

FCF per share

Return Ratios (%)

RoE

RoCE

Working Capital Ratios

Asset Turnover (x)

Inventory (Days)

Debtor (Days)

Creditor (Days)

Leverage Ratio (x)

Net Debt/Equity

CY16

6.8

7.2

9.9

5.5

97.7

18.6

17.4

12.7

3.5

11.6

4.4

6.5

86.1

86.2

3.4

-0.8

CY17

7.0

7.5

10.3

4.7

81.7

18.0

16.9

12.2

3.3

11.3

3.8

5.8

69.1

69.2

3.5

-0.8

CY18

7.2

7.7

11.8

5.0

84.0

17.6

16.3

10.7

3.0

10.9

4.0

4.8

64.8

64.9

3.3

-0.6

CY19

8.4

9.1

13.8

5.5

79.1

15.1

13.9

9.1

3.0

10.0

4.4

7.9

65.3

65.4

2.8

-0.7

CY20

5.9

6.8

14.3

5.5

93.3

21.4

18.6

8.8

3.7

13.7

4.4

8.6

41.9

42.1

2.1

-0.9

CY21E

8.5

9.5

16.0

6.8

80.0

14.8

13.2

7.9

2.9

9.5

5.4

8.0

56.3

56.4

2.4

-0.9

CY22E

8.5

9.6

17.7

6.8

80.0

14.8

13.1

7.1

2.7

9.3

5.4

8.0

50.5

50.6

2.3

-0.9

Standalone - Cash Flow Statement

Y/E December

OP/(Loss) before Tax

Depreciation

Interest & Finance Charges

Direct Taxes Paid

(Inc)/Dec in WC

CF from Operations

(Inc)/Dec in FA

Free Cash Flow

CF from Investments

Interest Paid

Dividend Paid

CF from Fin. Activity

Inc/Dec of Cash

Opening Balance

Closing Balance

E: MOFSL Estimates

CY16

10,403

450

-3,795

252

6,642

-227

6,414

-330

-17

-5,655

-5,680

631

485

1,116

CY17

10,701

455

-3,892

-654

6,083

-355

5,728

1,514

-10

-6,548

-6,558

1,039

1,116

2,154

CY18

10,984

556

-3,997

-1,487

5,495

-780

4,715

661

-10

-5,664

-5,674

482

2,155

2,637

CY19

11,469

694

-3,087

126

8,795

-993

7,802

-4,483

-11

-6,266

-6,277

-1,965

2,637

672

CY20

7,853

866

-2,396

3,040

8,928

-417

8,511

-2,010

-12

-5,631

-5,643

1,275

672

1,947

CY21E

11,281

973

-2,843

128

8,923

-1,000

7,923

431

-21

-6,751

-6,772

2,582

1,947

4,529

(INR M)

CY22E

11,259

1,104

-2,837

8,950

-1,000

7,950

-194

-11

-6,737

-6,748

2,008

4,529

6,537

6 May 2021

Castrol (India)

NOTES

6 May 2021

Castrol (India)

Explanation of Investment Rating

Investment Rating

BUY

SELL

NEUTRAL

UNDER REVIEW

NOT RATED

Expected return (over 12-month)

>=15%

< - 10%

< - 10 % to 15%

Rating may undergo a change

We have forward looking estimates for the stock but we refrain from assigning recommendation

*In case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall within following 30

days take appropriate measures to make the recommendation consistent with the investment rating legend.

Disclosures

The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).

Motilal Oswal Financial Services Ltd. (MOFSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOFSL, the Research Entity (RE) as defined in the Regulations,

is engaged in the business of providing Stock broking services, Investment Advisory Services, Depository participant services & distribution of various financial products. MOFSL is a subsidiary

company of Passionate Investment Management Pvt. Ltd.. (PIMPL). MOFSL is a listed public company, the details in respect of which are available on www.motilaloswal.com. MOFSL

(erstwhile Motilal Oswal Securities Limited - MOSL) is registered with the Securities & Exchange Board of India (SEBI) and is a registered Trading Member with National Stock Exchange of

India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE), Multi Commodity Exchange of India Limited (MCX) and National Commodity & Derivatives Exchange Limited (NCDEX) for its

stock broking activities & is Depository participant with Central Depository Services Limited (CDSL) National Securities Depository Limited (NSDL),NERL, COMRIS and CCRL and is member

of Association of Mutual Funds of India (AMFI) for distribution of financial products and Insurance Regulatory & Development Authority of India (IRDA) as Corporate Agent for insurance

products.

Details

associate

entities

Motilal

Oswal

Financial

Services

Limited

are

available

the

website

http://onlinereports.motilaloswal.com/Dormant/documents/List%20of%20Associate%20companies.pdf

MOFSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and buy or sell

the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a

market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have any other potential conflict of

interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the specific recommendations made by the

analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even though there might exist an inherent conflict of interest in

some of the stocks mentioned in the research report

MOFSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, the recipients of this report should be aware

that MOFSL may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific merchant banking, investment

banking or brokerage service transactions. Details of pending Enquiry Proceedings of Motilal Oswal Financial Services Limited are available on the website at

https://galaxy.motilaloswal.com/ResearchAnalyst/PublishViewLitigation.aspx

A graph of daily closing prices of securities is available at

www.nseindia.com, www.bseindia.com.

Research Analyst views on Subject Company may vary based on Fundamental research and

Technical Research. Proprietary trading desk of MOFSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated from MOFSL research activity

and therefore it can have an independent view with regards to Subject Company for which Research Team have expressed their views.

Regional Disclosures (outside India)

This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or use

would be contrary to law, regulation or which would subject MOFSL & its group companies to registration or licensing requirements within such jurisdictions.

For Hong Kong:

This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong Kong Securities

and Futures Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst Regulations) 2014 Motilal

Oswal Securities (SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of research report in Hong Kong. This report

is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity to which this document relates is only available to

professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these securities, products and services in any jurisdiction where their offer

or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not located in Hong Kong & are not conducting Research Analysis in Hong Kong.

For U.S.

Motilal Oswal Financial Services Limited (MOFSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under applicable state

laws in the United States. In addition MOFSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act" and together with the 1934

Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any brokerage and investment services provided by

MOFSL , including the products and services described herein are not available to or intended for U.S. persons. This report is intended for distribution only to "Major Institutional Investors" as

defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional investors"). This document must not be acted on or relied on

by persons who are not major institutional investors. Any investment or investment activity to which this document relates is only available to major institutional investors and will be engaged in

only with major institutional investors. In reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and

interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOFSL has entered into a

chaperoning agreement with a U.S. registered broker-dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be

executed within the provisions of this chaperoning agreement.

The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered

broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public appearances and trading

securities held by a research analyst account.

For Singapore

In Singapore, this report is being distributed by Motilal Oswal Capital Markets Singapore Pte Ltd (“MOCMSPL”) (Co.Reg. NO. 201129401Z) which is a holder of a capital markets services

license and an exempt financial adviser in Singapore.As per the approved agreement under Paragraph 9 of Third Schedule of Securities and Futures Act (CAP 289) and Paragraph 11 of First

Schedule of Financial Advisors Act (CAP 110) provided to MOCMSPL by Monetary Authority of Singapore. Persons in Singapore should contact MOCMSPL in respect of any matter arising

from, or in connection with this report/publication/communication. This report is distributed solely to persons who qualify as “Institutional Investors”, of which some of whom may consist of

"accredited" institutional investors as defined in section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore (“the SFA”). Accordingly, if a Singapore person is not or ceases to be

such an institutional investor, such Singapore Person must immediately discontinue any use of this Report and inform MOCMSPL.

Specific Disclosures

1 MOFSL, Research Analyst and/or his relatives does not have financial interest in the subject company, as they do not have equity holdings in the subject company.

2 MOFSL, Research Analyst and/or his relatives do not have actual/beneficial ownership of 1% or more securities in the subject company

3 MOFSL, Research Analyst and/or his relatives have not received compensation/other benefits from the subject company in the past 12 months

4 MOFSL, Research Analyst and/or his relatives do not have material conflict of interest in the subject company at the time of publication of research report

5 Research Analyst has not served as director/officer/employee in the subject company

6 MOFSL has not acted as a manager or co-manager of public offering of securities of the subject company in past 12 months

7 MOFSL has not received compensation for investment banking/ merchant banking/brokerage services from the subject company in the past 12 months

8 MOFSL has not received compensation for other than investment banking/merchant banking/brokerage services from the subject company in the past 12 months

9 MOFSL has not received any compensation or other benefits from third party in connection with the research report

10 MOFSL has not engaged in market making activity for the subject company

********************************************************************************************************************************

The associates of MOFSL may have:

financial interest in the subject company

actual/beneficial ownership of 1% or more securities in the subject company

received compensation/other benefits from the subject company in the past 12 months

6 May 2021

Castrol (India)

other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the specific

recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even though there

might exist an inherent conflict of interest in some of the stocks mentioned in the research report.

acted as a manager or co-manager of public offering of securities of the subject company in past 12 months

be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company(ies)

discussed herein or act as an advisor or lender/borrower to such company(ies)

received compensation from the subject company in the past 12 months for investment banking / merchant banking / brokerage services or from other than said services.

The associates of MOFSL has not received any compensation or other benefits from third party in connection with the research report

Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only. While calculating beneficial holdings, It does not consider

demat accounts which are opened in name of MOFSL for other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income from clients which are not

considered in above disclosures.

Analyst Certification

The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research

analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.

Terms & Conditions:

This report has been prepared by MOFSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and may not be

altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of MOFSL. The report is

based on the facts, figures and information that are considered true, correct, reliable and accurate. The intent of this report is not recommendatory in nature. The information is obtained from

publicly available media or other sources believed to be reliable. Such information has not been independently verified and no guaranty, representation of warranty, express or implied, is made

as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. The report is prepared solely for informational purpose and does not

constitute an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments for the clients. Though disseminated to all the customers

simultaneously, not all customers may receive this report at the same time. MOFSL will not treat recipients as customers by virtue of their receiving this report.

Disclaimer:

The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or

in whole, to any other person or to the media or reproduced in any form, without prior written consent. This report and information herein is solely for informational purpose and may not be

used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Nothing in this report constitutes investment, legal,

accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities discussed and opinions expressed in this

report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This

may not be taken in substitution for the exercise of independent judgment by any recipient. Each recipient of this document should make such investigations as it deems necessary to arrive at

an independent evaluation of an investment in the securities of companies referred to in this document (including the merits and risks involved), and should consult its own advisors to

determine the merits and risks of such an investment. The investment discussed or views expressed may not be suitable for all investors. Certain transactions -including those involving futures,

options, another derivative products as well as non-investment grade securities - involve substantial risk and are not suitable for all investors. No representation or warranty, express or implied,

is made as to the accuracy, completeness or fairness of the information and opinions contained in this document. The Disclosures of Interest Statement incorporated in this document is

provided solely to enhance the transparency and should not be treated as endorsement of the views expressed in the report. This information is subject to change without any prior notice. The

Company reserves the right to make modifications and alternations to this statement as may be required from time to time without any prior approval. MOFSL, its associates, their directors and

the employees may from time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform

or seek to perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a

separate, distinct and independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of information that is

already available in publicly accessible media or developed through analysis of MOFSL. The views expressed are those of the analyst, and the Company may or may not subscribe to all the

views expressed therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or

published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any

locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject MOFSL to any registration or

licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose

possession this document may come are required to inform themselves of and to observe such restriction. Neither the Firm, not its directors, employees, agents or representatives shall be

liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information.

The person accessing this information specifically agrees to exempt MOFSL or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not

to hold MOFSL or any of its affiliates or employees responsible for any such misuse and further agrees to hold MOFSL or any of its affiliates or employees free and harmless from all losses,

costs, damages,

expenses that may be suffered by the person accessing this information due to any errors and delays.

Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 71934200/ 022-71934263; Website

www.motilaloswal.com.CIN no.: L67190MH2005PLC153397.Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road, Malad(West), Mumbai-

400 064. Tel No: 022 7188 1000.

Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst: INH000000412. AMFI:

ARN - 146822; Investment Adviser: INA000007100; Insurance Corporate Agent: CA0579;PMS:INP000006712. Motilal Oswal Asset Management Company Ltd. (MOAMC): PMS (Registration

No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth Management Ltd. (MOWML): PMS (Registration No.:

INP000004409) is offered through MOWML, which is a group company of MOFSL. Motilal Oswal Financial Services Limited is a distributor of Mutual Funds, PMS, Fixed Deposit, Bond,

NCDs,Insurance Products and IPOs.Real Estate is offered through Motilal Oswal Real Estate Investment Advisors II Pvt. Ltd. which is a group company of MOFSL. Private Equity is offered

through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group company of MOFSL. Research & Advisory services is backed by proper research. Please read the Risk

Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no assurance or guarantee of the returns. Investment in securities market is subject to market risk,

read all the related documents carefully before investing. Details of Compliance Officer: Name: Neeraj Agarwal, Email ID: na@motilaloswal.com, Contact No.:022-71881085.

* MOSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National Company Law

Tribunal, Mumbai Bench.

6 May 2021