Metal Giant for short term gains (20%)

This stock has been in accumulation phase ever since the markets bounced back and is currently trading with a positive bias . The short term candles show brief consolidation in 15 min chart and the earlier GAPUP / GAP Down candles are more or less totally filled. The Group chairman announced that the company will be targeting aggressive debt reduction and that in FY 21 It has deleveraged it self by 29,390 crores .That’s a massive deleveraging considering the cyclical nature of metal sector.

The company reported its highest consolidated EBIDTA of ₹30,892 crore in FY21, a 71% jump from the previous year, with an EBIDTA margin of around 20%. ( Source : Economictimes)

Generally higher EBIDTA is an indication of improved operational cashflow .In highly leveraged business greater operational execution enables better working capital cycle and reduces cashflow pressures on the company.

Recommendation : Buy in the range of 1170 – 1180 with a stop loss of 1140, keep a short term target of 1240+ in 20 to 30 trading days . Option players can buy the June series -1220 CE at 15 or 16 and keep a target of 25+ with a stop loss of 12.

The stock has seen improved volume based buying and has been contributing to the broader market gains.

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