Gladiator Stocks - Graphite India - ICICI Direct

Strategy

Buy Graphite India in the range of Rs. 428.00-438.00 for target price of Rs. 520.00 with a stop loss of Rs. 385.00. Time Frame: Six months

Technical View

The share price of Graphite India has recently logged a resolute breakout from one and half year base formation (Rs. 384-103) on the back of highest weekly volume since Sept-19, signifying resumption of primary up trend that augurs well for next leg of up move from medium term perspective

The price action since March-2020 has taken a shape of a rising channel formation (as shown in chart), indicating elevated buying demand. We expect stock to endure its rising trajectory and gradually head towards Rs. 520 in coming months as it is upper band of rising channel, placed around Rs. 535

Structurally, stock has formed a higher peak and trough on the yearly chart, after three years corrective phase, indicating rejuvenation of major up trend

The stock has witnessed buying demand in the vicinity of 10 weeks EMA, which has been held on multiple occasions since April 2020. We believe, the strong support is currently placed at Rs. 385 as it is 50% retracement of past two weeks up move (Rs. 308-449), at Rs. 378

Fundamental View

Graphite India is the largest Indian producer of graphite electrodes and one of the largest globally, by total capacity. Its manufacturing capacity of 98,000 tonnes per annum is spread over three plants at Durgapur and Nashik in India and Nurnberg in Germany. The Company has over 40 years of technical expertise in the industry. Graphite India manufactures the full range of graphite electrodes but stays focused on the higher margin, large diameter, ultra-high power (UHP) electrodes

Graphite India has healthy balance-sheet and on a consolidated basis net cash position ~Rs. 2600 crore as on 31st December, 2020. During Q3FY21, on a consolidated basis GIL generated net cash of Rs. 196 crore.

In the recent budget, reduction in custom duty on scrap imports will benefit steel manufacturers especially EAF steel manufacturers, which augurs well for GIL.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_GladiatorStocks_Graphite_Feb21.pdf

Shares of GRAPHITE INDIA LTD. was last trading in BSE at Rs.436.4 as compared to the previous close of Rs. 416.6. The total number of shares traded during the day was 119169 in over 7890 trades.

The stock hit an intraday high of Rs. 439.75 and intraday low of 417. The net turnover during the day was Rs. 51512389.

Source : Equity Bulls

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