Is Castrol India overvalued or undervalued?

As of 21 July 2025, the valuation grade for Castrol India has moved from very expensive to expensive, indicating a shift towards a less extreme valuation but still suggesting that the stock may not be a bargain. The company is currently considered overvalued. Key ratios include a PE ratio of 23.04, an EV to EBITDA of 15.76, and a PEG ratio of 3.04, which are relatively high compared to its peers.
In comparison, Gulf Oil Lubricants and Veedol Corporation, which are rated very attractive, have PE ratios of 16.85 and 16.75, respectively, highlighting the premium that Castrol India commands despite its expensive valuation. Additionally, while Castrol India has a strong ROE of 41.45% and a dividend yield of 5.91%, these figures do not sufficiently justify its current price levels when compared to the more favorable valuations of its peers. Over the past year, Castrol India has underperformed the Sensex, with a return of -10.99% compared to the Sensex's 1.98%, reinforcing the notion that the stock may be overvalued.