Momentum Pick: Ingersoll Rand – upside open despite outperformance, 121% returns in 1-yr, analysts say; Hold for this price target

Investors of Ingersoll Rand (India) Limited must hold the stock with a positional term to long term view at least two analysts have told Zee Business Web team. Stocks of this air compressor manufacturing company surged 9.6 per cent on Tuesday and ended at Rs 1311.10 on the BSE. 

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A strong momentum is seen in this stock, going forward, notwithstanding the existing stock market movement, technical analyst Nilesh Jain opines. Meanwhile, fundamental analyst Sandeep Jain said that there could be a temporary impact on the price movement, but the overall prospects look strong for Ingersoll Rand and investors must hold on to this stock with a long term perspective. 

The stock today hit its 52-week high of 1324.15 and remained the sector outperformer by 9.4 per cent according to data available on the BSE. The stock witnessed a trend reversal after correction on two consecutive sessions. It is moving above its 5-day, 20-day, 50-day, 100-day and 200-day moving averages.  

The Ingersoll Rand shares have outperformed the BSE Sensex by 84.27 per cent over the 12-month period giving returns of 121 per cent. On the Year-to-Date (YTD) basis, the returns have almost been 101 per cent. 

Technical View 

Hold| LTP: Rs 1311| Target: Rs 1400-1450| Stop Loss: Rs 1100| Upside 11% 

The moving averages reflect a bullish trend in the stock. Nilesh Jain, who is Assistant Vice President (AVP), Equity Research Technical and Derivatives at Centrum Broking said that momentum indicators RSI (Relative Strength Index) and MACD (Moving Average Convergence Divergence) indicate an overbought situation in this stock.  

He advised investors against making any fresh positions recommending buy on decline at levels around 1200. The stock has been making higher tops and higher bottoms. He sees a target price of Rs 1400-Rs 1450 over the next 10-15 trading sessions. Being a small cap stock, it does not have any major weightage in the market and is therefore not likely to get impacted by market movement, he added. 

He puts a stop loss at Rs 1100.  

The stock has an adjusted beta of 1.35 with Sensex.  

Fundamental View  

Calling it an excellent stock, fundamental analyst Sandeep Jain said that he had previously recommended this stock on Zee Business on a number of occasions. The stock is still going strong and must be held for next 6-9 months, he added. He said that though the stock has moved significantly, the upside is still open. 

He also advised against any fresh investments and suggested levels of Rs 1100 for entering to reap better risk-to-reward ratio. While the overall markets look jittery now, the impact on ths stock would be temporary, the Tradeswift Director said warning investors that the stock will move in tandem with the broader markets.  

The company has posted strong September quarterly results with nets sales at Rs 248 cr, up 67 per cent year-on-year (yoy) and standalone net profit at Rs 26 cr, up by 42 per cent yoy. 

The positives are high promote holding at 74 per cent with no promoter pledge. Foreign Institutional Investors have marginally increased their holding in this quarter. Cash and cash equivalents(HY) highest at Rs 295.24 cr.        

The stock is currently available at a PE multiple of 42, which his higher than some of its peers including Shakti Pumps and Kirloskar Brothers Limited.  

Among the negatives, Mutual Funds have decreased their holdings in this stock. 

Inputs from BSE Website, Edelweiss

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