Our Focus

In our last write up we discussed Divis Lab Ltd & which belongs to the pharma sector. Now we got one company that belongs to the Automobile Ancillaries sector. As everyone can see the demand for 2-3-4 wheeler vehicles in the market. Also, Nifty Auto is trading at a lifetime high and this stock is just at mid. This stock has to reach its highs and wants to show its potential.

Market Sentiment Analysis

We all are eyewitnesses of this new lifetime high. The market came toward the previous high i.e. 18900 and showed some weakness. We had assumed that profit booking would come and the market would come down. But suddenly market showed back to back gap opening and went to 19350 and the reason was HDFC Bank & HDFC merger date. Finally market has shown a round figure price of 19500 and given a signal of overbought. Now we are expecting profit booking from this levels up to 19000 and that is strong support now.

We are bullish on the market before that we can see some profit booking from lifetime high. Let’s discuss the company fundamentals and chart.

Company Business Module

Amaraja Battery is engaged in the business of manufacturing lead-acid batteries for automotive and industrial. They preferred suppliers to manufacturers of Telecom equipment, UPS sector (OEM & Replacement), Indian Railway, and to power, oil & gas, etc. As we know increasing demand for EV vehicles based on that battery demand is increasing. Earlier one bike or car has only one battery and now one bike or car has 2-4 batteries. Because the battery is the heart of EV vehicles.

Technical Analysis

After the first lockdown share price on one side rallied till 1000 and that was almost 200% from the bottom. In February 2021, the share price confirmed Head & Shoulder and start its downtrend. In one & half years share price has come down to around 500. Exactly near this bottom share price started to make the bottom and in October 2022, the share has confirmed Cup & Handle. That was the green flag for the uptrend. Recently share price has given a breakout to its resistance of 660 with volumes.

The share price is trading around 700 and we are expecting 800/900/1000 levels in the coming few months. Immediate support is around 650/600.

Fundamental Analysis

1. The battery is a demanding product and demand is increasing.
2. The company is almost debt free.
3. Year-on-year net profits are increasing.
4. ROE & ROCE are more than average.
5. The company is expanding its business rapidly.
6. FIIs have increased their stake in this company i.e. 36%.

Why Share Price Can Go Up?

Demand for EV vehicles is increasing and based on that sales are increasing. Also, the share price has made a strong base after falling 50% and it has given trend change confirmation on a weekly chart. Recently it has given a breakout to the previous top. Based on these parameters we are bullish from the current levels.

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Disclaimer: The contents produced here are purely for educational purposes. They should not be construed as buy/sell recommendations. Readers are advised to consult their Investment advisor before making any decisions based on the above write-up.