Technical Check: This consumer electric company breakout from range; stock on track to hit 52-week high

Voltas Ltd. rallied over 40 per cent in the last 1 year compared to 25 per cent upside seen in the Nifty50 in the same period but the recent breakout seen in the stock on daily charts could help it surpass October highs.

The consumer electric company with a market-capitalisation of more than Rs 43000 cr hit a 52-week high of Rs 1356 on 19 October and then the trend went sideways.

The stock took support near 1131 and then bounced back, but it has been trading in a narrow range of just 100-150 points.

The recent price action pushed the stock out of the consolidation range which opens fresh target for the stock in the range of Rs 1500 in the next 6-9 months that translates into an upside of over 15 per cent from Rs 1303 recorded on 14 January, suggest experts.

Voltas is engaged in the business of air conditioning, refrigeration, electro-mechanical projects as an EPC contractor both in domestic and international geographies (Middle East and Singapore) and engineering product services for mining, water management, and treatment, construction equipment, and textile industry.

Voltas is also one of the most reputed engineering solution providers specializing in project management. The company has 5,000+ Customer sites actively managed across India.

“Voltas is forming a compressor manufacturing JV with the aim of bringing in a strong tech partner, and the financial aspects of the JV are still being worked out. The focus is on self-reliance and reducing OEM dependency via own manufacturing under the PLI scheme,” Ashish Chaturmohta Director Research, Sanctum Wealth, said.

“The Management has guided EBIT margin guidance for UCP at 11-12%, with expectations for a gradual recovery of the project business’ margin,” he added.

Technically, the stock price hit an all-time high of 1357 in the month of October and since then has been sideways. It has been consolidating its gains after the up move and formed a base for the next leg of the rally.

The price has taken support at a 100-day moving average (green line) and bounced back.

“Price is now showing breaking from a range of 1280-1145. It has formed long-ranged bullish candlestick above breakout level indicating buying momentum in the stock,” said Chaturmohta.

“Relative strength index (RSI has given positive crossover with its average on the weekly chart indicating strong uptrend is resuming. Thus, the stock can be bought at current levels on dips to 1280 with a stop loss of 1240 for the target of 1500 in the coming 6-9 months,” he added.

(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.)