Buy Castrol India, target price Rs 170: Motilal Oswal

Motilal Oswal has buy call on Castrol India Ltd. with a target price of Rs 170. The current market price of Castrol India Ltd. is Rs 139.8. Time period given by analyst is one year when Castrol India Ltd. price can reach defined target.
Castrol India Ltd., incorporated in the year 1979, is a Mid Cap company (having a market cap of Rs 13818.04 Crore) operating in Petrochemicals sector.

Financials
For the quarter ended 30-06-2021, the company reported a Standalone Total Income of Rs 902.90 Crore, down -21.69 % from last quarter Total Income of Rs 1153.00 Crore and up 78.51 % from last year same quarter Total Income of Rs 505.80 Crore. Company reported net profit after tax of Rs 140.00 Crore in latest quarter.

Investment Rationale
Castrol is the perfect candidate for a value play, with return rations of 48–50% and a dividend payout policy of +80% (translating to dividend yield of ~5%). The company declared interim dividend of INR2.5/share (same as last year). On a one-year forward PE basis, the stock trades at a ~40% discount to its LT PE average of 26.8x.


Promoter/FII Holdings
Promoters held 51 per cent stake in the company as of June 30, 2021, while FIIs held 12 per cent, DIIs 16.5 per cent and public and others 20.5 per cent.