Castrol India may test Rs 600, says Prakash Diwan

Prakash Diwan of prakashdiwan.in told CNBC-TV18, "Castrol India is just beginning to make its big move. If you recall last week, short position was built up on that block deal and that is precisely the reason why that accelerated move has been seen and now it is likely to happen rather. Castrol which gets primarily most of its business from the passenger cars and the two wheelers space, the mobility space - as they call personal mobility space - it is also now looking at getting big time into the replacement market.""So, what is happening is the newer technology of cars that is coming in because of emission norms primarily employs or uses oil that needs faster or more frequent draining. It means that the oil change that you are talking about in passenger vehicles is going to be as frequent as you would kind of expect in global standards or in the rest of the markets. It is primarily double in terms of volume growth and it would be double of what they have seen till now," he said."Castrol India has become the kind of brand strength that it has. It has been able to price itself very well inspite of the raw material costs having come down for itself. So, the kind of return on equities (ROEs) that it stands on, it is likely to be over 100 percent. Whatever it is making is actually without any capital expenditure (capex) initial money that goes into the business. So, it is a great consumption story. It will get completely re-rated including Gulf Oil. That space itself is getting to look up quite a bit and my sense is Castrol could probably be anywhere in the Rs 600 plus zone probably by next March or mid 2017."