JTL Industries – Target 250, 267, 290, 330 (Upside 6% to 40%)
Updated
Stock is in intermediate wave 5 of primary 3 and targets 290 (CMP 236). Its covered by only one analyst – Axis Securities(target 265), and the analyst has done full justice with his research and is quite a good effort on practical grounds. At 290, the stock will be valued at app. 25x FY25 earnings (around 40x TTM). Strong dealers network of over 800, capex focus on value added products, consistent gain in market share with aim to double market share after expansion gets commercially operationalized etc. are points which indicate unfolding of next cycle of growth for the company. Moreover, the stock has low beta of 0.2 which gives added comfort.
The company has clocked CAGR of 35% in revenue in past 10 years (from a low base), I feel confident that its growth in future would be faster than expected industry growth of ~7% over 2023-2030. And therefore stock should show up good momentum and should smoothly break through the supply zones (which anyways seem to have ended on Dec.6 with humungous volume).
Given high growth rate and expansion project showing up in first quarter in Q3FY24, I believe that stock should get a boost in rating and sustainable valuations.
FPIs increased holding in Sep. quarter, MFs reduced and promoter group acquired some 0.5% in December, while that is usually good news, it seems as reaction to huge selling volume on Dec. 6 (almost 90% of free float), which leads me to not getting enthusiastic on that front alone, but am impressed by sound fundamental factors. MFs offloaded probably because its alpha to Nifty, is negative, but given low beta, I get zero alpha if not positive and that’s fine for me.
This offers a high confidence, low risk reward setup. I have opened long with target of 290 (not waiting for a pullback entry), stop loss at 189 with target duration of max. 6 months (though I may hold it in portfolio for longer duration should am not willing to be stopped out). If margin funding can be obtained, that would be added boost to RoE. With target / SL, the RoI is +23% / -20% and has risk reward of 1.60x, which seems low, but is a high confidence setup so I would term this as good. I am viewing this equity investment as proxy to bank FD, and allocation of significant minority portion of my portfolio, which gives me good alpha to fixed income returns (due to low beta). 4 Targets are for trailing stop loss.
I would not be amused, if its next Astral in the making which is going at a PE of 95 and turns out to be a multibagger!
Caution : While wave 4 pattern is complete and the current upward move that began on 7th Dec. is assumed as a motive wave it should be borne in mind that wave 4 is always unpredictable and can throw off the analysis for some time, if the correction elongates. In such case, I would be willing to hold it for longer duration as it has low beta. Further, the upward wave is in 50%-61.8% retracement zone, to which it may react (and may offer good pullback entry), which is normal and any dip below 195 would be ruling out impending wave as impulsive and continuation of wave 4 in which case it should be held for longer term if not wishing to be stopped out.
Disclaimer : The contents herein are my personal views and opinion, for me to make an investment decision for myself, shared here with an objective of seeking views and comments from traders community at trading view platform. Nothing contained herein should be construed as an advice, offer, inducement or encouragement to buy or sell any shares, security, derivatives linked to the security, debt security or any other security of the company or the underlying mentioned herein. The readers must make their own independent assessment, evaluation and valuation of the underlying / company and/or any of the securities issued by it or referenced to it. The reader is advised to take advice from their own professional financial advisors before entering into any transaction or making a financial decision, without relying on anything contained hereinabove, or views given as addendum or comments hereafter. The author shall not be responsible or liable, directly or indirectly, for any loss or damage, including loss of profits, caused to the reader, or any other person or third party, whether pecuniary or otherwise, whether in present or in future, whether incurred or probable. However, the author shall be glad if the readers want to share with the author, the proceeds of profits (excluding losses if any) made in the investment mentioned herein.
Any replication of the contents herein is strictly prohibited except with the prior written consent of the author. Deviation of anything from above shall render the positive profits to be clawed back to the author.
The company has clocked CAGR of 35% in revenue in past 10 years (from a low base), I feel confident that its growth in future would be faster than expected industry growth of ~7% over 2023-2030. And therefore stock should show up good momentum and should smoothly break through the supply zones (which anyways seem to have ended on Dec.6 with humungous volume).
Given high growth rate and expansion project showing up in first quarter in Q3FY24, I believe that stock should get a boost in rating and sustainable valuations.
FPIs increased holding in Sep. quarter, MFs reduced and promoter group acquired some 0.5% in December, while that is usually good news, it seems as reaction to huge selling volume on Dec. 6 (almost 90% of free float), which leads me to not getting enthusiastic on that front alone, but am impressed by sound fundamental factors. MFs offloaded probably because its alpha to Nifty, is negative, but given low beta, I get zero alpha if not positive and that’s fine for me.
This offers a high confidence, low risk reward setup. I have opened long with target of 290 (not waiting for a pullback entry), stop loss at 189 with target duration of max. 6 months (though I may hold it in portfolio for longer duration should am not willing to be stopped out). If margin funding can be obtained, that would be added boost to RoE. With target / SL, the RoI is +23% / -20% and has risk reward of 1.60x, which seems low, but is a high confidence setup so I would term this as good. I am viewing this equity investment as proxy to bank FD, and allocation of significant minority portion of my portfolio, which gives me good alpha to fixed income returns (due to low beta). 4 Targets are for trailing stop loss.
I would not be amused, if its next Astral in the making which is going at a PE of 95 and turns out to be a multibagger!
Caution : While wave 4 pattern is complete and the current upward move that began on 7th Dec. is assumed as a motive wave it should be borne in mind that wave 4 is always unpredictable and can throw off the analysis for some time, if the correction elongates. In such case, I would be willing to hold it for longer duration as it has low beta. Further, the upward wave is in 50%-61.8% retracement zone, to which it may react (and may offer good pullback entry), which is normal and any dip below 195 would be ruling out impending wave as impulsive and continuation of wave 4 in which case it should be held for longer term if not wishing to be stopped out.
Disclaimer : The contents herein are my personal views and opinion, for me to make an investment decision for myself, shared here with an objective of seeking views and comments from traders community at trading view platform. Nothing contained herein should be construed as an advice, offer, inducement or encouragement to buy or sell any shares, security, derivatives linked to the security, debt security or any other security of the company or the underlying mentioned herein. The readers must make their own independent assessment, evaluation and valuation of the underlying / company and/or any of the securities issued by it or referenced to it. The reader is advised to take advice from their own professional financial advisors before entering into any transaction or making a financial decision, without relying on anything contained hereinabove, or views given as addendum or comments hereafter. The author shall not be responsible or liable, directly or indirectly, for any loss or damage, including loss of profits, caused to the reader, or any other person or third party, whether pecuniary or otherwise, whether in present or in future, whether incurred or probable. However, the author shall be glad if the readers want to share with the author, the proceeds of profits (excluding losses if any) made in the investment mentioned herein.
Any replication of the contents herein is strictly prohibited except with the prior written consent of the author. Deviation of anything from above shall render the positive profits to be clawed back to the author.
Note
It's breathing at the high probability retracement zone, where retracement for minor 1 may be coming. Will be good opportunity to buy when it falls, thereafter it may not provide opportunity for opening long, except at low RRR.Note
Minor 2 has achieved more than required retracement, it might pass some time in the zone, before starting on its journey on minor wave 3 towards target. Today's fall wasnt a surprise, only that the broader market provided fuel to what was due, only difference is that it made it work faster that it should have in normal course.Stay on course, accumulated more on fall.
Trade closed: stop reached
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.