Domestic brokerage firm Ashika Stock Broking has picked up Rail Vikas Nigam (RVNL) and Polycab India as its top picks for this week which can deliver up to 15 per cent return in the near term. The brokerage believes that both the counters are strong on both techincal and fundamental basis and are poised for double-digit gains in the short run. Here's what Ashika said about these two stocks:
Rail Vikas Nigam (RVNL) | Target Price: Rs 87-89 | Upside Potential: 13-15%
Rail Vikas Nigam follows an asset light business model, which helps keep its fixed asset part lower, helping it to keep its balance sheet stress free, and resulting in lower inventory days. Rail Vikas Nigam is a project executing agency working for and has a strong order book. It is in the business of executing all types of railway projects including railway electrification, metro projects, new lines, doubling, gauge conversion, workshops, major bridges, construction of cable stayed bridges, institution buildings and more.
The stock in the recent period has generated a breakout from the Flag formation which has been in the formation stage since the last 2-2.5 months. Buying demand is seen emerging in the stock after a base at the 50 days EMA (currently at Rs 67) highlighting robust price structure. The daily MACD has generated a buy signal moving above its nine periods average thus supports positive bias. The stock is likely to head towards Rs 87-89 levels in the coming weeks, being the 123.6 per cent retracement of the December 22 decline.
Polycab India | Target Price: Rs 3,065 | Upside Potential: 11%
Polycab India reported strong 3QFY23 numbers on all fronts. Revenue up 10 per cent YoY in spite of high base, lower commodity prices and higher inflation on the back of healthy volume growth in cables and wires business. EBITDA margin continued to improve sequentially. Its net Cash position improved to Rs 1870 crore as of December 2022 end as against Rs 670 crore as of December 2021 end. During the quarter, wires and cables revenue grew by 11 per cent YoY and performance was primarily on account of benefits realized through the merger of HDC and LDC verticals last year
The stock is on the verge of generating a breakout above last one year range of Rs 2,865-2,200 signaling resumption of up move and offer fresh entry opportunity. Presently the stock is supported by strong volume signaling larger participation before the breakout. The stock has recently rebounded taking support at the 200 days EMA (currently placed at Rs 2,525) and the rising demand line joining lows since June 2022 signaling a positive price structure. Hence one can expect the stock to maintain positive bias and head towards Rs 3,065 as it coincides with the previous swing high of 2022.
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