Kotak Institutional Equities has maintained its add rating on Castrol India with a target price of ₹210 after BP announced a major strategic divestment involving its global lubricants business. As part of its US$20 billion divestment programme, BP will sell 65% of Castrol Group Holding (CGHL)—the entity that owns a 51% stake in Castrol India—to Stonepeak, an alternative investment firm. The deal values CGHL at an enterprise value of US$10.1 billion, equivalent to 8.6× LTM EV/EBITDA, and an equity value of US$8 billion.
Following the transaction, 100% of CGHL’s stake will be transferred into a joint venture between Stonepeak and BP, with BP retaining a minority 35% share. Kotak noted that the ownership reshuffle is a significant structural development for Castrol’s global operations but does not immediately alter the business fundamentals of Castrol India.
However, as required under SEBI’s takeover regulations, the incoming acquirer has announced an open offer for 26% of Castrol India’s public shareholding at ₹194 per share, which will be a key near-term event for investors. Kotak said the offer price sits below its fair value estimate but marks an important milestone in Castrol India’s ownership transition.
The brokerage maintains its positive stance, citing Castrol India’s strong market positioning, robust cash generation, and stable operating structure, even as ownership changes unfold at the global parent level.
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