Mahindra CIE Automotive was the biggest gainer of the Nifty500 on February 24, rising nearly 16 percent even as the benchmark Nifty and the Nifty Auto came under selling pressure.
The stock has rallied more than 26 percent this calendar year so far, while the Nifty Auto gained just 2 percent and the Nifty50 is down more than 3.5 percent in the same period.
After consolidating for a couple of weeks, the stock gave a big breakout with a 15.75 percent rally to Rs 449 on February 24, forming the robust bullish candlestick on the daily charts, with high volumes.
It has been in higher highs, higher lows formation since mid-December. It has been trading above all key short and long-term moving averages, with the expansion of the Bollinger band.
After forming a double bottom in May 2022, the stock has given 170 percent return till February 24, while the Nifty Auto has gained just 16 percent in the same period.
"The running Inverse Head & Shoulder pattern breakout signals strong market interest and optimism in the continuation of the stock's prior uptrend. The rising volumes accompanied by higher volumes points towards the long built-up behind the stock," Vidnyan Sawant, AVP - Technical Research, GEPL Capital said.
The 20-week EMA acted as a brilliant variable support to the stock, he said. The ratio charts against the Nifty Auto index have shown a multi-year breakout, which highlights the stock's strong performance and suggests that it will continue to outperform, he said.
Vidnyan anticipates the stock's price to rise to Rs 520, where the stop-loss must be Rs 400 strictly on the closing basis.
Robust earnings
On February 22, the auto ancillary company reported a 153 percent year-on-year growth in consolidated profit at Rs 195 crore for fourth quarter of 2022, driven by healthy operating performance and exceptional gains.
Consolidated revenue during the quarter jumped 35 percent YoY to Rs 2,247 crore, with India business growing 21.7 percent and Europe business showing an impressive 43 percent growth with easing semiconductor shortage.
On the operating front, earnings before interest, tax, depreciation and amortisation grew by 62 percent to Rs 292 crore in Q4CY22, with a margin expansion of 221 bps despite an increase in input cost from the year-ago period.
Even the yearly performance by the subsidiary of CIE automotive group of Spain was quite strong, with profit in 2022 growing 80 percent to Rs 711.3 crore and revenue increasing by 29.4 percent to Rs 8,753 crore compared to the previous year.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
