CASTROLIND - Investment Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Investment Rating: 4.0

📊 Fundamental Analysis of Castrol India Ltd (CASTROLIND)

Castrol India is a leading player in the lubricants segment, backed by strong brand equity and consistent profitability. However, current valuations and growth metrics suggest a cautious approach

ROE (41.8%) & ROCE (55.2%): Outstanding capital efficiency, among the best in its sector.

Debt-to-Equity (0.04): Virtually debt-free, ensuring financial stability.

Dividend Yield (3.89%): Attractive for income-focused investors.

PEG Ratio (3.45): High, indicating overvaluation relative to earnings growth.

EPS (₹9.55) vs P/E (22.9): Reasonable earnings, but valuation is stretched compared to industry PE (18.3).

📈 Technical & Valuation Insights

Current Price: ₹218

52-Week Range: ₹163 – ₹284

DMA 50 / DMA 200: ₹218 / ₹212 — trading near 50 DMA, slightly above 200 DMA

RSI (47.4): Neutral zone

MACD (0.70): Mildly positive, suggesting consolidation

Volume: Slightly above average, indicating steady interest

🟢 Ideal Entry Price Zone

Based on technical and valuation trends

₹200 – ₹215: Ideal accumulation zone near support and historical buy levels

₹185 – ₹195: Deep value zone if broader market corrects

Avoid fresh entry above ₹230 unless supported by strong earnings momentum.

📈 Long-Term Outlook

Price Targets

2025: ₹257 – ₹261

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2026: ₹351 – ₹356

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2030: ₹883 – ₹896

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Growth Drivers

Strong brand and distribution network

Expansion into rural and auto care markets

Strategic partnerships and product innovation

Risks

PEG ratio suggests limited upside unless earnings accelerate

Rising input costs and FX pressures

EV transition may impact long-term lubricant demand

🛑 Exit Strategy (If Already Holding)

If you're already invested

Holding Period: 3–5 years, with annual review of earnings and PEG ratio

Exit Triggers

PEG remains above 3.5 for 2+ quarters

ROE drops below 30%

Price exceeds ₹280 without EPS growth — consider partial profit booking

Trailing Stop-Loss: ₹200 to protect downside

🧠 Final Verdict

Castrol India is a high-quality, dividend-paying stock with excellent capital efficiency. However, its high PEG ratio and moderate growth outlook suggest limited upside unless earnings accelerate. Ideal for accumulation near ₹200–₹215 with a 3–5 year horizon. If holding, stay invested but monitor valuation and industry shifts closely.

Would you like a comparison with peers like Gulf Oil or Indian Oil to assess alternatives in the lubricants and energy space?

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