TECHNICALS: The long term Price Charts seem to indicate a troughing out in the Stock even though the short-term Charts indicate a predominantly sideways pattern. There exists a strong support at 155 levels which seems unlikely to be broken in a hurry. On the upside, the first resistance was at 172 levels which has been taken out today on strong volumes. The next resistance is at 182 levels followed by a strong supply area in the 207-216 zone. Confirmation of uptrend only after it trades above 216 levels for a reasonable period.
FUNDAMENTALS: At CMP 177 (52 wk high 409, 52 wk low 155) the Scrip is trading at about 1.4X Book, which seems reasonable. The Corporate performance over the past few Quarters has been excellent with Sales, Net Profit as well as Loan-Book all having grown in the range 23%-28% apiece. The Projected Loan Book growth this fiscal is at 25% and possibly sustainable over the next couple of years. The main negative, and it is a rather big one, is the high exposure to SEBs and the possible risk of default therefrom. Therefore, it becomes essential to enter at the right price in order to ensure a reasonable safety buffer to take care of possible sell-offs in the Scrip on account of Market-negative Policy pronouncements and/or change in the Default trajectory.
Holistically speaking, in my opinion, the Scrip is an ACCUMULATE in the range 155-170 for the long term Investor, with possible upsides of 25-30% over the next 12-18 months.
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