Technical Check: 100% in a year! This Budget 2022 stock could rally nearly 30% in 6-9 months

Sobha Ltd rallied by 100 per cent in a year compared to 20 percent upside seen in Nifty50 in the same period but this stock from the real estate sector has more upside in store especially after the recent breakout above 960-970 seen on daily charts, suggest experts.

Sobha Limited, incorporated in 1995, is a real estate developer engaged in construction to operations of townships, housing projects, commercial premises, and other related activities.

The company is also engaged in manufacturing activities related to interiors, glazing and metal works, and concrete products. It's business activities include - Real Estate (64% of the revenue, FY21), commercial premises as well as Manufacturing activities related to interiors, glazing and metal works, and concrete products.

The real Estate sector is seen as one of the favoured sectors in the upcoming Budget. The S&P BSE Realty index has rallied by over 6 per cent while Sobha Ltd saw an upside of over 16 per cent in the same period.

“We believe real estate is on the cusp of an upcycle with several macro factors supporting like low-interest rates, benign prices, and rising affordability coupled with low homeownership in India,” Hemang Jani, Head Equity Strategy, Broking and Distribution, Motilal Oswal Financial Services Ltd, said.

The recent price action pushed the stock to a fresh 52-week high of Rs 1045 on the BSE on 19 January, and experts feel that the momentum is likely to continue that could take it towards Rs 1250 that translates into an upside of 28 per cent from Rs 972 recorded on 21 January, suggest experts.

The company has real estate projects aggregating 30.11 million square feet of developable area. It has 5.64 million square feet of ongoing contractual projects which are under various stages of construction.

The company has received orders worth Rs. 2,126 crore only from the Contractual and Manufacturing segment, which is 1.4 times the FY2020 revenues from the segment.

From a technical perspective, the stock is trading well above the short and long-term moving averages of 30,50,100, and 200-DMA which is a positive sign for the bulls.

Pricewise, the stock is in a long-term uptrend forming a higher top and higher bottom on daily chart i.e., each new high after an up move is higher than the previous high, and each new low after a decline is higher than the previous low.

“For the last 10 weeks stock has seen consolidation between 970 and 760 odd levels to form a base for next leg of rally, In the recent few sessions price has seen good momentum and high volumes indicating buying participation in the stock,” Ashish Chaturmohta, Director Research, Sanctum Wealth, said.

“Now, the stock has given breakout on the upside and trading at new all-time high. The Moving average convergence and divergence (MACD) line after hovering around equilibrium level of zero has firmly turned up indicating a new uptrend in the stock,” he said.

Chaturmohta further added that the stock can be bought at current levels on dips to 995 with a stop loss of 950 for a target of 1250 in the coming 6-9 months.

(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.)