Why HFCL shares jumped 5% today; multibagger stock up 216% in 6 months

HFCL Ltd shares climbed 5 per cent in Friday's trade after CARE Ratings upgraded the credit ratings of various bank facilities of HTL Limited, a material subsidiary of the company. HFCL said CARE has upgraded two long term bank facilities of HTL to 'Care A' with positive outlook 'positive' against Care BBB+ with outlook 'Stable' earlier. Further, the Rs 150 crore worth short term bank facilities have been upgraded to 'Care A1' from 'Care A2' earlier.

CARE assigned Rs 230-crore long and short term bank facilities to Care A- and Care A2+, respectively. The rating upgrade reflected the strengthened credit profile and improving business fundamentals of HTL and reinforces the confidence of lenders and stakeholders in its business prospects and financial position, CARE said.

Following the development the stock rose 4.68 per cent to hit a high of Rs 214.40 on BSE. HFCL stock was in news earlier this week as CARE upgraded rating for HFCL's Rs 1,525.95 crore long-term bank facilities to Care A+ from Care A-, upgrading its view to 'positive' from 'stable'.  Short-term facilities, amounting to Rs 2,550 crore were rated A1 from Care A2+.

"The upgrade in the credit ratings reflects the company's improved credit profile and enhanced creditworthiness, as assessed by CARE Ratings Limited. The rating upgrade reinforces the confidence of lenders and other stakeholders in the company's business strategy, execution capabilities, financial discipline and long-term growth prospects," HFCL informed stock exchanges quoting CARE.

Kranthi Bathini of WealthMills Securities said stocks like HFCL are high-beta in nature.  "If you see the long-term trend of these stocks, they made higher tops and from there onwards they witnessed consolidations. But right now the company commentary has been good. There is a positive sentiment on the stock and momentum is in favour of, uh, these companies," Bathini said.

He advised traders to have a trailing stop loss somewhere around Rs 180 on the stock. He said the stock is chasing the momentum.

"As far as the current valuations are concerned, they are fully priced in. But the momentum has been riding the rally. So, he can hold on to the stock and if he has high-risk appetite. If he does not have the high-risk appetite, sell on rallies," Bathini said.