Multibagger Kirloskar Oil Engines shares jump 8% to hit fresh one-year high

Shares of Kirloskar Oil Engines Ltd rose sharply in Monday's trade, extending their gains for the second straight session. The stock surged 8.30 per cent to hit a fresh 52-week high of Rs 518.75 over its previous close of Rs 479. The multibagger counter has zoomed over 191 per cent in the past one year. On a year-to-date (YTD) basis, it has soared more than 63 per cent. Around 1.10 lakh shares changed hands today on BSE, higher than the two-week average volume of 64,000 shares. Turnover on the counter stood at Rs 5.55 crore, commanding a market capitalisation (m-cap) of Rs 7,241.86 crore.

The company posted strong numbers in the first quarter of the current financial year (Q1 FY24). "Topline growth of Rs 1,500 crore in the first quarter came much better than the Street expectation. Bottomline growth has been substantial. Q1 numbers were strong and the second half is expected to be more substantial," Mayuresh Joshi, Head-Equity Research at William O'Neil India, told BT TV.

Kirloskar Oil is engaged into manufacturing of engines, farm equipment and generator set with a sizable presence in international markets. It also manufactures diesel engines for construction equipment. It specialises in manufacturing air-cooled and liquid-cooled engines for diesel generator sets across a wide range of power outputs (2kVA to 1500 KVA).

In its earnings update, the company said it saw strong demand in the domestic markets, aided by infrastructure spends, easing of commodity inflation and an overall buoyant economy.

"Changes in the rainfall pattern during this monsoon season resulted in a change in the demand patterns in the pumps segment. In the international markets, while there was an overall softening in the market, KOEL delivered strong results by focusing on the right product mix and the right geographies. From an immediate to medium term outlook standpoint, we see strong market demand, but uncertainties remain over inflation, supply chain disruptions and geo political dynamics," Kirloskar Oil said.

On the technical setup, the stock was last seen trading higher than the 5-day, 10-, 20-, 30-, 50-, 100-, 150-, and 200-day simple moving averages (SMAs). The counter's 14-day relative strength index (RSI) came at 74.85. A level below 30 is defined as oversold while a value above 70 is considered overbought. The company's stock has a price-to-equity (P/E) ratio of 22.46 against a price-to-book (P/B) value of 2.98.

The scrip has a one-year beta of 1.01, indicating high volatility.

"The stock has been in a stellar up move, hovering well above all its significant EMAs on the daily charts. The structure is bullish biased with the formation of higher highs and higher lows. The bullish gap of Rs 465-451 is likely to be seen as strong support, followed by the consolidation zone breakout around Rs 415-odd level. While on the higher end, till the mentioned supports are sustained, the stock is poised to continue its upwards journey with some timewise cool-offs," said Osho Krishan, Senior Analyst, Technical & Derivative Research at Angel One.

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"Kirloskar Oil has given a breakout above Rs 465 zone to improve the bias. It has entered into a new zone with next upside target of Rs 535-540 levels. Near term support would be at around Rs 480 level," said Vaishali Parekh, Vice-President - Technical Research at Prabhudas Lilladher.

"The stock is trading near the Rs 510 mark, which is way above its all-major exponential moving averages. Going forward there is possibility of reversion to mean. Fresh longs are not advised as of now," said Jigar S Patel, Senior Manager - Technical Research Analyst at Anand Rathi Shares and Stock Brokers.

Meanwhile, Indian equity benchmarks opened lower today, taking cues from the global markets. Mid- and small-cap shares were also down as Nifty Midcap 100 fell 1.32 per cent and small-cap dived 1.80 per cent.

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