Sharing a few ideas for profit from Moneycontrol Pro, Nitin Sharma of Moneycontrol.com spoke about a stock that he is tracking closely, Castrol India.
Castrol India is an automotive and industrial lubricant manufacturing company; it dominates the private player space with 12 percent market share.
It has one of the highest brand recall values in this space and is a household name, which is why its volume is double that of his nearest competitor.
The company's 40 percent volume comes from the personal mobility segment, and another 40 to 45 percent comes from the commercial vehicle segment.
Pre-pandemic, the company was witnessing an average sales volume of 205 million litres, which was growing at a CAGR of 1 percent over the last five years.
We estimate that Castrol’s volume should grow at a CAGR of 13 percent over the next two years, while realisation should also see a low to mid-single digit growth.
Further, we forecast a 20 percent per annum EPS growth over the next two years. The stock is currently trading at FY23 PE of 14.1 times and we recommend investors to accumulate the stock with a long-term view.
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