Is Castrol India overvalued or undervalued?

As of 23 July 2025, the valuation grade for Castrol India has moved from expensive to very expensive, indicating a significant shift in its perceived market value. The company is currently overvalued, with a PE ratio of 23.95, a price-to-book value of 9.93, and an EV to EBITDA ratio of 16.43. In comparison to its peers, Gulf Oil Lubricants, which is rated very attractive, has a much lower PE ratio of 16.92, while Veedol Corporation also shows a favorable PE of 16.57, further emphasizing Castrol India's overvaluation.
Despite a strong return on equity (ROE) of 41.45% and a robust dividend yield of 5.68%, the high PEG ratio of 3.16 suggests that the stock may not be a good value relative to its growth prospects. Additionally, while Castrol India has outperformed the Sensex in the short term, with a year-to-date return of 15.91% compared to the Sensex's 5.87%, its one-year performance shows a decline of 7.24%, contrasting with the Sensex's positive return. This further supports the conclusion that Castrol India is overvalued in the current market environment.