Gladiator Stocks - Timken India - ICICI Direct

Strategy

Buy Timken India in the range of Rs. 1200.00-1235.00 for target price of Rs. 1465.00 with a stop loss of Rs. 1138.00. Time Frame: Six months

Technical View

The capital goods space is regaining upward momentum after past several of year's underperformance. Within capital goods space we remain constructive on Timken India given its higher relative strength ranking

We expect the stock to resolve higher and gradually head towards Rs. 1465 in coming months as it is the price parity of Dec-Jan rally (Rs. 1055-1360), projected from January low of Rs. 1160, placed at Rs. 1465

The share price has formed a higher high-low after undergoing slower pace of retracement (which is healthy from medium term perspective), as over past four weeks it retraced 61% of preceding two weeks rally (Rs. 1055-1360), placed at Rs. 1171, indicating conclusion of secondary correction that in turn suggest resumption of primary up trend. Thereby offering fresh entry opportunity with favourable risk reward

Stock has formed a strong support base in the vicinity of Rs. 1138 as it is confluence of upward sloping trend line (drawn adjoining Mar-May lows of Rs. 639-742), at Rs. 1150 coincided with 20 weeks EMA placed at Rs. 1167

Fundamental View

Timken India Limited, a Timken Company subsidiary, started manufacturing bearings in India nearly three decades ago and today has state-of-the-art manufacturing plants in Jamshedpur and Bharuch to serve local bearing market needs and beyond. Employing the highly collaborative technical selling model for which Timken is known, the India team works directly with large OEM customers and with end users through a network of authorized distributors to make design and application recommendations to optimize performance and reliability

Timken India reported subdued Q2FY21 numbers that were broadly in line with our estimates. Revenue for the quarter came in at Rs. 392.23 crore, down 2.2% YoY (vs. I-direct estimate of Rs. 400 crore). Slower recovery in CV & other industrial sectors impacted Timken's performance compared to peers. Gross margins contracted ~190 bps YoY. EBIDTA margin was at 21.1% vs. 22.4% YoY. However, it is important to note that Timken posted one of its highest margins in Q2FY20

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_GladiatorStocks_Timken_Feb21.pdf

Shares of TIMKEN INDIA LTD. was last trading in BSE at Rs.1276.95 as compared to the previous close of Rs. 1294.25. The total number of shares traded during the day was 2038 in over 329 trades.

The stock hit an intraday high of Rs. 1309.9 and intraday low of 1268. The net turnover during the day was Rs. 2599898.

Source : Equity Bulls

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