The Mumbai-based firm's profit after tax rose to 1.94 billion rupees ($23.31 million) in the three months ended Sept. 30 from 1.87 billion rupees, a year earlier.

Crude oil prices declined, ranging between $75.4 and $97.69 a barrel in the quarter compared to the range of $83.65 and $114.75 a barrel in the year-ago quarter, helping Castrol India post a 1.3% fall in raw and packaging material costs.

Still, the company's total expenses rose 6% to 9.4 billion rupees on other costs. Castrol India did not specify what these costs entailed.

The company also flagged hardening oil prices at the end of the quarter due to global uncertainties and inflationary pressures. "The recent conflict in the Middle East has brought more challenges to crude price volatility," Managing Director Sandeep Sangwan said.

The company's revenue rose 5.5% to 11.83 billion rupees, in line with its optimism about demand in the second half of the year - expressed in a post-earnings call in August - on easing raw material inflation.

Rainfall in September made up for a deficit in the first half of the quarter, according to analysts, leading to a recovery in rural demand, particularly in sectors such as two-wheelers.

"We continue to build our reach into rural India to tap into demand," Sangwan said in a statement.

Castrol India's shares closed 1.42% higher ahead of its results. They have risen 13% so far this year.

($1 = 83.2180 Indian rupees)

(Reporting by Varun Vyas and Hritam Mukherjee in Bengaluru; Editing by Janane Venkatraman)