Buy Sicagen India Ltd (BSE Code: 533014) around Rs. 29 - 30. Target: 1st TGT – Rs. 32.5, 2nd TGT – Rs. 36, 3rd TGT - Rs. 40 (30% Upside) in 2 months holding period.
The company has performed well YOY by showing increment in its revenue, net profit and EPS by 21.6%, 216% & 145.6% respectively. This quarter results will be announced on 20th Oct'10 and it is expected that company is going to perform well in this quarter also.
Rationale:
Sicagen India Ltd. (533014) is a south based company. It has a strong business relationship with its principals, suppliers and customers like Tata Motors, Finolex, ACC etc. Company is confident of making higher turnover and profits in trading of building materials and commercial vehicles.
Sicagen's core business is trading of building materials such as steel tubes, MS/GI pipes, boiler tubes, seamless tubes, rectangular/square hollow sections, PVC pipes, electrical cables, steel fittings and cement. Sicagen is the authorized distributor for Tata Steel, Jindal Pipes, SAIL, Finolex Cables, Supreme Industries, Maharashtra Seamless and ACC Cements.
Sicagen is relatively a small company in terms of Market cap (Rs.117.5 Crore). Company is having an EPS of 2.3 and P/E of 12.9. Sicagen is available at 1/3rd of its Industry P/E. Company has shown a tremendous growth if we compare it with last year. Company is highly undervalued as far as book value (92.3) and P/E (12.9) is concerned. After looking all these factors we can say that it is a fundamentally strong company and can fetch decent returns in short and medium term holding.
Technical Analysis:
· Short term moving average (20-EMA) is currently providing an immediate support to the counter near Rs.25 levels.
· Next level of support could be expected near the Medium term moving average (50-EMA), currently trading at Rs. 23 mark, which could be utilized to add positions.
· The start of a bullish buying momentum could be witnessed in the scrip, in case the "Slow Stochastic momentum indicator (%D & %K) penetrate the oversold (20) mark which looks eminent on the charts".
· The bounce back of the MACD indicator from the neutral levels would also encourage investors to "Accumulate at dips" for a trending movement.
· The Demand Index is trading in the positive direction, which indicates towards the buying interest at every lower level.
· The correction seems to be over in this counter and it may attempt for Rs. 38- 40 levels in the intermediate time frame of nearly two months.
As the economic situation is improving and focus is on housing and infrastructure development, it reflects the bright future for company's Building Material and Commercial Vehicle Division.
Note: The basis of stock selection can be technical, news events or quarterly results etc. These stocks are strictly for short term holding as advised hence one must not hold it for medium/long term. One should do his/her own research before buying. I am just suggesting it.
Booked Profits in Sicagen as Targets are achieved.
ReplyDeleteStock hit the high of 35.40. Booked 50% profit@34 and 50% @35
ReplyDelete