Castrol India shares surged as much as 15 per cent in early trade today amid block deals in the stock.
Reuters had earlier reported that Castrol Ltd, a unit of BP Plc and the controlling shareholder of Castrol India, was supposed to sale 8.5 per cent stake in Castrol India today. As of June 30, 2016, Castrol Ltd had 56.42 per cent stake in Castrol India and BP Mauritius held 0.11 per cent stake.
The stock has been under pressure in this month so far. Till yesterday, Castrol India shares had fallen over 5 per cent this month, compared to 1.7 per cent gain in the broader Sensex.
Earlier in May, BP had announced that its wholly owned subsidiary Castrol Ltd had sold 56.87 million shares or 11.5 per cent stake in Castrol India in open market.
AK Prabhakar, head-research at IDBI Capital, said the stock has been under pressure this month because of the block deal. "Because of the block deal only, it (Castrol India) corrected, last month also this block deal hangover was there."
The gains in the stock post block deal today indicate that those who did not get the stock in block deal are buying from the market and shorts also would have been trapped today, Mr Prabhakar further added.
IDBI Capital is bullish on Castrol India. It has a target of Rs 516 on the stock.
"Castrol has been giving 50 per cent ROE (return on equity), 20 per cent margin for the last 10 years...We are very bullish on the stock," Mr Prabhakar added.
Castrol India shares closed 9.44 per cent higher at Rs 462.45 compared to 0.37 per cent fall in the broader Nifty.
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