Castrol India downgraded to 'Hold' by MarketsMOJO

Castrol India, a leading lubricant company in the midcap sector, has recently been downgraded to a 'Hold' by MarketsMOJO. This decision was based on various factors, including the company's high management efficiency with a ROE of 50.36% and a low Debt to Equity ratio of 0 times.
Technically, the stock is currently in a bullish range and has shown a positive trend since 14-Dec-23, generating a return of 9.61%. This is supported by factors such as MACD, Bollinger Band, KST, and OBV. Additionally, the company has a high institutional holding of 27.47%, indicating their confidence in the company's fundamentals.

Castrol India has also outperformed the market (BSE 500) with a return of 34.01% in the last year, compared to the market's return of 22.62%. With a market cap of Rs 14,985 crore, it is the largest company in the lubricant sector, constituting 52.73% of the entire sector. Its annual sales of Rs 4,986.58 crore make up 29.68% of the industry.

However, the company has shown poor long-term growth with a low annual growth rate of 5.36% in net sales and 0.17% in operating profit over the last 5 years. The results for Sep 23 have also been flat. With a ROE of 41.3, the stock is currently trading at an expensive valuation with a price to book value of 8.1. However, it is still trading at a fair value compared to its historical valuations.

In the past year, while the stock has generated a return of 34.01%, its profits have only increased by 0.6%, resulting in a high PEG ratio of 19.7. On the positive side, the company offers a high dividend yield of 4% at the current price.

Overall, while Castrol India may not have a strong long-term growth potential, it is currently performing well in the market and has a strong management efficiency and institutional backing. Investors may consider holding onto the stock for now, but it is important to keep an eye on its future performance.