Technical Check: Almost 100% in a year! Bullish candles with high volumes make Birlasoft an attractive buy

Birlasoft rallied by over 90 per cent so far in 2021 compared to 28 per cent upside seen in the Nifty50 while on a 1-year basis the stock rose more than 159 per cent.

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The stock was consolidating in a narrow range of 40-60 points since September. But the recent breakout from the consolidation range in November with high volumes make it an attractive buy even at current levels.

The company with a market capitalization of more than Rs 13000 cr hit recorded a breakout earlier this week. The momentum took it to a fresh 52-week high of Rs 478.60 on the BSE.

Based on the technical evidence, experts feel that the upside remains intact, and investors can add fresh money for an upside target of Rs 550 in the next 6-9 months which translates into a return of more than 25 per cent from Rs 438 recorded on 16 November.

Birlasoft is aiming to achieve a target of US$1 billion in revenues in the next four years (implying a CAGR of 20%). The company aims to achieve this via organic and inorganic revenues.

The company has Rs 128cr of debt and 1043 cr of cash in books. The company consistency delivered a Return on Capital Employed (ROCE) between 15-20% over the last 5 yrs. (22% in FY21).

Going forward, the company will continue to improve annuity revenues, cross sell to clients and focus on niche verticals, and focus on client mining (top 20 accounts up ~18% YoY in FY21).

Technically, the stock price has seen a strong rally from 250 recorded in May 2021 odd to 400 levels back in June. Since then, it has been consolidating for the last 5 months.

“Price has taken support at 89-day exponential moving average which acted as support during previous consolidation and started fresh uptrend,” Ashish Chaturmohta, Director, Equity Research at Sanctum Wealth, said.

“Long body bullish candlesticks in recent sessions with high volumes is indicating fresh buying participation coming into the stock. Thus, suggesting after long consolidation stock has formed for a base and ready to start new uptrend,” he added.

Chaturmohta further added that the stock can be bought at current levels and dips to 425 with stop loss of 400 for the target of 550 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.)