CASTROLIND - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 4.0
| Stock Code | CASTROLIND | Market Cap | 18,092 Cr. | Current Price | 183 ₹ | High / Low | 252 ₹ |
| Stock P/E | 18.5 | Book Value | 18.4 ₹ | Dividend Yield | 4.65 % | ROCE | 55.2 % |
| ROE | 41.8 % | Face Value | 5.00 ₹ | DMA 50 | 188 ₹ | DMA 200 | 199 ₹ |
| Chg in FII Hold | -0.59 % | Chg in DII Hold | -0.37 % | PAT Qtr | 228 Cr. | PAT Prev Qtr | 244 Cr. |
| RSI | 39.2 | MACD | -1.39 | Volume | 8,46,011 | Avg Vol 1Wk | 13,93,012 |
| Low price | 173 ₹ | High price | 252 ₹ | PEG Ratio | 2.79 | Debt to equity | 0.04 |
| 52w Index | 12.7 % | Qtr Profit Var | 9.82 % | EPS | 9.87 ₹ | Industry PE | 13.9 |
📊 Financials: Castrol India Ltd. demonstrates strong profitability with ROE at 41.8% and ROCE at 55.2%, reflecting exceptional capital efficiency. Debt-to-equity ratio of 0.04 indicates a virtually debt-free balance sheet. Quarterly PAT at 228 Cr is slightly lower than the previous quarter (244 Cr), showing a modest decline. EPS of 9.87 ₹ supports earnings visibility, though growth momentum is moderate.
💹 Valuation: Current P/E of 18.5 is above the industry average (13.9), suggesting a premium valuation. P/B ratio ~9.95 (Price 183 ₹ / Book Value 18.4 ₹) is expensive. PEG ratio of 2.79 indicates stretched valuation relative to growth. Dividend yield of 4.65% is attractive, providing strong income support for investors.
🏢 Business Model: Castrol India operates in the lubricants sector, with a strong brand presence and distribution network. Competitive advantage lies in brand loyalty, wide product portfolio, and global backing from BP. The company benefits from recurring demand in automotive and industrial lubricants.
📈 Entry Zone: Attractive accumulation zone between 175–180 ₹, near support levels and below DMA200 (199 ₹). RSI at 39.2 indicates oversold conditions, while MACD (-1.39) suggests bearish momentum. Long-term investors can accumulate gradually at lower levels.
🔒 Holding Guidance: Strong fundamentals with high ROE/ROCE and attractive dividend yield make it a healthy company. However, valuations are stretched. Suitable for long-term holding if accumulated near support zones.
Positive
- Exceptional ROE (41.8%) and ROCE (55.2%) highlight strong efficiency.
- Debt-free balance sheet (Debt-to-equity 0.04).
- Attractive dividend yield of 4.65% provides steady income.
- Strong brand presence and distribution network.
Limitation
- P/E (18.5) above industry average (13.9), indicating premium valuation.
- P/B ratio of 9.95 suggests expensive valuation relative to book value.
- PEG ratio of 2.79 highlights stretched valuation compared to growth.
- Quarterly PAT decline (228 Cr vs 244 Cr) shows slowing momentum.
- Institutional sentiment weak with FII (-0.59%) and DII (-0.37%) reductions.
Company Negative News
- No major negative news reported, but recent profit decline and reduced institutional holdings raise caution.
Company Positive News
- Strong dividend yield supports investor confidence.
- Debt-free operations enhance financial resilience.
- Global brand backing from BP ensures credibility.
Industry
- Lubricants sector benefits from recurring automotive and industrial demand.
- Industry P/E at 13.9 suggests moderate optimism.
- Brand loyalty and distribution strength drive competitive advantage.
Conclusion
✅ Castrol India Ltd. is financially strong, debt-free, and highly efficient with exceptional ROE/ROCE. Attractive dividend yield makes it appealing for income-focused investors. However, valuations are stretched, and profit momentum has slowed. Long-term investors should consider accumulation near 175–180 ₹ for better margin of safety.
I can also prepare a dividend sustainability analysis to show whether Castrol’s high yield is sustainable over the next few years. Would you like me to add that?