The company has managed to sustain; there has been no spectacular growth but increasing operating costs indicates that margins were under pressure.
For year ended 31st Dec 2009, net revenue rose by merely 5%. Operating expenses were 83% of the revenue which in 2008, were 81%. Interest outgo was maintained at Rs.3.50 crore level and EBIDTA was down 7%. Yet, net profit was up 45% at Rs.381 crore.
2009 was the centenary year for Castrol brand in India and it celebrated that with by declaring a bonus in the ratio of 1:1. It recommended a final dividend of Rs.5/- per` share and a special dividend of Rs.10/- per share for the year ended 31st December 2009. This is in addition to an interim dividend of Rs.10/- per share, totaling to a dividend of Rs.25/- per share for the full year 2009.
Looking ahead, inflation will remain a challenge. And there could be further pressure on the margins till price pressure eases. 2010 would be more about sustaining than about growth.
Stocks like Castrol are for the long term. Capital appreciation will come with time. The company has always been liberal with its dividend payouts and bonus issues. Including the current bonus, this is the seventh bonus from Castrol India. Earlier, the company had issued a liberal 1:1 bonus, each in May 1999, February 1994 and in June 1987. Also, it had issued a 3:5 bonus, each in May 1995, May 1992 and in November 1990.
Stay invested with a 2-3 year perspective.
Source: Internet (premiuminvestments.in by SP Tulsian)
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