Is Castrol India overvalued or undervalued?

Aug 07 2025 08:01 AM IST
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As of August 6, 2025, Castrol India is considered overvalued with a valuation grade of expensive, reflected by high financial ratios compared to peers, despite a strong ROCE and dividend yield, and has underperformed the Sensex over the past year.
As of 6 August 2025, the valuation grade for Castrol India has moved from very expensive to expensive, indicating a slight improvement in its perceived value. The company is currently considered overvalued based on its financial metrics. Key ratios include a PE ratio of 22.09, an EV to EBITDA of 15.42, and a Price to Book Value of 11.61, all of which are relatively high compared to its peers.

In comparison, Gulf Oil Lubricants and Veedol Corporation are both classified as very attractive, with PE ratios of 15.81 and 16.45, respectively. This suggests that Castrol India is trading at a premium compared to these competitors. Additionally, while Castrol India has a strong ROCE of 118.66% and a dividend yield of 6.09%, its recent stock performance has lagged behind the Sensex, particularly over the past year, where it has returned -12.23% compared to the Sensex's 2.48%. Overall, the analysis indicates that Castrol India is overvalued in the current market environment.
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