Experts see the stock inching closer to Rs 149-162 in the next 3-6 months, suggest experts. A stop loss for long positions can be placed below Rs 104.
The smallcap stock which is on the verge of giving a breakout from a Symmetrical Triangle pattern is also looking to expand capacity by ~25% to 233,000 tons per annum (TPA) by FY25E.
Usha Martin (UML) is the market leader in the Indian wire and wire rope space and is among the top five leading manufacturers globally.
UML is primarily engaged in the manufacture and sale of steel wires, strands, wire ropes, cords, related accessories, etc. It is also involved in the sale of other products such as wire drawing and allied machines.
“UML has been able to generate strong cash flows, driven by the management’s increased focus on improving the company’s product mix towards a more value-added portfolio in India as well as in the international markets,” Pranav Jain, Fundamental Research Analyst at
Securities said in a note.
“The company is enhancing the capacity of its Ranchi plant, which shall enhance its overall capacity by ~25% to 233,000 tons per annum (TPA) by FY25E,” the note added.
“This capacity expansion plan includes adding new high-value, high-margin niche products to UML’s portfolio, having a significant demand in the export market,” recommends Jain.
The modernisation and upgradation of facilities, the total power consumed per unit is likely to reduce thus, improving the efficiency of operations over the medium term.
Technical Take:
UML has been on buyers’ radar so far in 2022 but consolidated in a narrow range for the past few months.
The stock price as per the weekly timeframe chart was moving in a larger consolidation phase over the last many months.
“We observe a formation of larger symmetrical type triangle patterns (rising bottoms and lower tops) during this period. Normally, such triangle formations during trending-up moves are considered as a temporary halt in the upside momentum or called as a running correction in the stock trend,” Nagaraj Shetti, Technical Research Analyst at HDFC Securities said.
“Such consolidation moves eventually result in a sharp upside breakout of the apex point of the triangle with acceleration in upside momentum,” he said.
Presently, the stock price has closed near its upside breakout point at Rs 138-140 levels. There is a higher possibility of buying emerging from here in UML.
“We are anticipating a significant upside breakout in the near term. One may look to create positional buy in the range of Rs 131-134 for a target of Rs 149-162 in the next 3-6 months,” recommends Shetti. A stop loss can be placed below Rs 104.
(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)
