Stock below Rs 200: A high ROCE and high dividend yield stock registered a solid breakout; Don't miss the action

The company is actively committed to supporting the transition to electric vehicles (EVs) and is collaborating with industry partners

Castrol India, a subsidiary of BP Plc, is the largest private-sector lubricant player in India. The company caters to the automotive, industrial, marine and energy segments. The company derives 40-45 per cent of its volume from personal mobility, the industrial segment contributed 12 per cent to volumes, while the remaining comes from CVO and heavy-duty vehicles. The company is the market leader and operates three manufacturing plants in India, located in Patalganga (Maharashtra), Paharpur (West Bengal) and Silvassa (Union Territory). It has the largest distribution network of 380 distributors and service customers through 110,000 retail sites.

Technically, the stock has witnessed breakout of the pivot of Stage-1, base. For three years, the stock has been trading in the Rs 80-150 range. Currently, it is above all key moving averages, and all long-term averages are in the uptrend. Interestingly, all the moving averages are trending up and in a desired sequence. For the last five weeks, volumes were recording above-average, showing fresh buying interest. The Institutions have increased their stake in the last quarter; the number of institutions has increased to 306.

Further, the price relative strength is fair and above the prior high. The Mansfield Relative Strength index just moved above the zero line. The weekly RSI entered into the strong bullish zone, and the MACD showed strong bullish momentum. It is well above the yearly VWAP and is trading at the Anchored VWAP resistance. The stock is also above the weekly Ichimoku cloud, while the KST and TSI indicators are also in a strong bullish set-up. In short, the stock is in a bullish trend. Hence, one should keep this stock on radar.

During a recent management interaction, an important highlight emerged: Castrol India, a subsidiary of BP Plc, emphasized the enduring strength of its underlying lubricants business and related fluids, projecting a robust outlook well into the 2040s. The company is actively committed to supporting the transition to electric vehicles (EVs) and is collaborating with industry partners to drive the next generation of technologies. Simultaneously, it is also diversifying its traditional lubricants business to adapt to evolving market demands.

As of the latest data from SIAM FY 2021-22, electric vehicles currently comprise less than 1 per cent of total new car sales in India. However, with the low penetration of cars in the country and the potential for further growth, Castrol India foresees sustained demand for internal combustion engines (ICE) vehicles alongside the burgeoning expansion of the EV market (Source: Internal reports).

Over the past 12 months, Castrol India has declared an equity dividend of Rs 6.50 per share. At the current market price, this translates to an attractive dividend yield of 4.52 per cent. Additionally, the stock boasts an impressive Return on Capital Employed (ROCE) of 60.8 per cent, reflecting its efficient utilization of invested capital.