Castrol India shares surge 10% to five-month high as bullish momentum builds; time to buy?

Castrol India share price: Castrol India Ltd. shares soared as much as 10% on Thursday, hitting a five-month high of ₹244.60 on the BSE amid robust trading volumes. The lubricant manufacturer’s stock has surged nearly 50% from its 52-week low of ₹162.80, which was recorded on January 28, 2025, as investor confidence rebounded strongly.

The scrip is currently trading at levels last seen on October 1, 2024, and has gained 26% over the past 12 sessions.

At 11:11 am, Castrol India shares were up 9% at ₹241.30, significantly outperforming the broader market, where the BSE Sensex inched up just 0.32%. Trading volumes skyrocketed nearly three-fold, with a combined 27.24 million shares—equivalent to 2.75% of the company’s total equity—changing hands on the NSE (26.35 million) and BSE (0.89 million), according to exchange data.

The stock was last seen trading at ₹239.39, reflecting a 7.67% gain at 11:25 am. Technical indicators point to mixed trends: while weekly MACD signals a bullish bias, the monthly outlook remains mildly bearish. The Bollinger Bands suggest volatility on both weekly and monthly charts. Meanwhile, the Heikin-Ashi candle briefly switched to red on February 28, signaling an initial bearish shift, but the stock has since regained momentum.

Valuation Stretched, But Momentum Strong

Castrol India’s trailing twelve-month (TTM) earnings per share (EPS) stands at ₹9.37, reflecting a 7.26% year-over-year increase. The stock trades at a TTM price-to-earnings (P/E) ratio of 25.71, surpassing the sector average of 20.10—an indication that investors are willing to pay a premium for the company’s strong brand positioning and growth prospects. However, with a price-to-book (P/B) ratio of 10.18, the stock appears overvalued compared to industry norms.

Market analysts maintain a bullish stance on Castrol India, with 2025 price targets pointing to an upside potential of ₹260.92 if market conditions remain favourable. The company’s leadership in the lubricant space, combined with consistent financial performance, underpins investor optimism.

Sector Outlook and Competitive Positioning

Castrol India dominates the domestic lubricant market, serving both automotive and industrial segments. The industrial sector accounts for 54% of overall demand, while the automotive segment, driven by commercial and personal vehicle sales, contributes 45%. The company supplies engine oils, coolants, gear oils, and greases for the automotive sector, while catering to steel, power, and cement industries with hydraulic oils, metalworking fluids, and process oils.

Despite growing concerns over electric vehicle (EV) adoption, Castrol India remains optimistic about long-term lubricant demand, citing India’s low car penetration and a gradual shift to EVs. The company sees opportunities in hybrid vehicles and emerging high-growth sectors such as aerospace, wind energy, defense, and electronics manufacturing.

Castrol India’s recent annual report, filed on February 25, 2025, reaffirmed the company’s strategy to capitalize on evolving trends in personal mobility, including rising SUV and premium two-wheeler sales, demand for thinner viscometric lubricants, and increasing vehicle adoption in rural markets. The company is also actively collaborating with original equipment manufacturers (OEMs) to support India’s gradual transition to EVs.

With internal combustion engine (ICE) vehicles expected to dominate the Indian market until at least 2040, analysts believe Castrol India remains well-positioned to navigate industry shifts while maintaining its leadership in the lubricants sector.