After years of sideways movement followed by under performance this company looks poised to make a move. Formerly only a PVC artificial leather manufacture they have now setup a plant for PU based artificial leather which feels more like the real thing. Until now India imported over 90% of such requirement from China. They already supply many footware and car manufacturers and have recently tied up with Mercedes too after almost 4-5 years of pitching their products to them. SO FORTUNES COULD CHANGE FOR THIS COMPANY SOON...
Technically the stock has just crossed its 200EMA and overall has a bullish structure. The stock could breakout above 328 and I would surely be buying it there. SL on this trade/investment would be 312 for traders and 292 if you are looking to invest in a company which has a new product coming to market.
The only short term trigger to watch for are its results on 12th Feb and if crude goes on a major run coz its raw material prices would increase.
I also expect its ROE/ROCE to start moving upwards now that expansion has been completed.
Be careful here, sometime just technical does not support. While they have leadership position, the challenege is they have been struggling to grow the business on the paper. Watch out related party major transactions which will raise the eyebrows and flags. Also check the cash transactions in a business wherein you should be rarely accepting cash, visit the factory and to get surprised the lower utilisation and then ask the question how come such higher sales with lower utilization. There are several other skeletons and multiple cockroaches in the can. So in this market dont fall into trap just because the stock is giving break out. Look for these issues which are real. Ah I forgot, check the foreign transaction and also if actually some of the marquee clients as claimed do actually have any business relationship.