Momentum Pick – Suprajit Engineering sets feet firmly on gas pedal, outperforms Sensex by 82% in 1-yr; analysts recommend this!

Auto component maker Suprajit Engineering Limited hit a 52-week high of Rs 439 on the BSE on Monday and ended at Rs 428.45, gaining 13 per cent on the closing price basis. The stock has given returns of 121 per cent over a 12-month period and outperformed the BSE Sensex by 82.57 per cent. On the Year-to-date (YTD) basis, the returns have been around 114 per cent. It has also outperformed BSE 500 in last three years.  

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The automotive cable and halogen bulb maker has posted a strong September quarter result. Should you invest in this stock? This is what technical and fundamental analysts say about this scrip. 

The Suprajit Engineering shares have risen by almost 18 per cent over the last two trading sessions and it is trading above its 5-day, 20-day, 50-day, 100-day and 200-day moving averages. The stock outperformed the sector by 13.5 per cent.  

Fundamental Analysis 

Suprajit Engineering: Buy| LTP: Rs 428| Target: Rs 450| View 6-9 months| Upside 5% 

The company reported a net profit of Rs 49.5 per cent for the quarter ended 30 September 2021 which was up sequentially and on the year-on-year (yoy) basis. The net sales was also up 37 per cent on Half Yearly basis. The company has given returns of over 20 per cent on the capital employed.  

The stock is available at a PE multiple of 31 with a Price-to-Book (PB) value at 5.8. Its peers Minda Industries is trading at a PE multiple of 74 while Endurance Tech is available at 39. Meanwhile, Sundaram Clayton is available at price-to-earnings ratio of 16. 

Analyst Sandeep Jain said that the stock is fundamentally strong and is currently available at attractive valuations. While, the stock has moved significantly over the last two trading sessions, it is a fit candidate for long term investment. It has shown a good appetite for growth and has been recommended by Jain at levels around Rs 200. Buy on decline is advised at levels between Rs 300 and Rs 350 and in staggered form, the Tradeswift Director said.  

He was bullish on auto ancillary stocks. He has a price target of Rs 450. The Foreign Institutional Investors (FIIs) have increased their stake in this quarter with holding of 4.60 per cent. The Domestic Institutional Investors (DIIs) have also raised their stake by 0.42 per cent to 2.39 per cent in the quarter gone by.  

Technical Analysis 

Suprajit Engineering: Buy| Target: Rs 460/500| Stop Loss: Rs 380| Upside 17% 

The stock has an adjusted beta of 1.2 with the Sensex and. It is a measure of volatility of and a stock that is assigned a value above 1, swings more than the Sensex. 

The RSI or Relative Strength Index is 71.83 as per Edelweiss. This is a measure of stock momentum and it suggests an overbought situation in the stock 

The stock has seen a decisive breakout this month from levels around Rs 380. The breakout has come after a three-year sideways consolidation and should be treated as a stop loss. This is a strong support for the counter, technical analyst Nilesh Jain said.  

Jain, who is Assistant Vice President (AVP), Equity Research Technical and Derivatives at Centrum Broking recommends buy on decline. The right levels to enter the stock is between Rs 400 and Rs 410.  

It could be bought for short term and positional term gains. 

(Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)