Wockhardt has more than doubled investor wealth in the past year but has been an underperformer so far in 2021, up 2 percent compared with an over 12 percent rally in the Nifty 50 and the Nifty Pharma index.
The stock hit a 52-week high of Rs 804.50 on the BSE on May 26 and has declined since then, wiping out most of the year’s gains. The stock dropped to Rs 515.05 on June 30 and then started trending upwards.
With a market capitalisation of more than Rs 6,000 crore, Wockhardt is trading well above its 5, 10, 20, 100 and 200-day moving averages. However, it still trades below its 50-day moving average of Rs 608 and 50-day exponential moving average of Rs 572.
The recent price action suggests that the momentum could continue on the upside and take the stock towards Rs 700-780 in the next two to three months, which translates into an upside of 25-40 percent from the July 20 closing price of Rs 557.60 on the NSE.
Wockhardt is a Mumbai-based pharmaceutical and biotechnology company. It produces formulations, biopharmaceuticals, nutrition products, vaccines and active pharmaceutical ingredients. It also operates a chain of advanced super speciality hospitals.
The company reported a net loss of Rs 12.7 crore in the first quarter of FY22 compared with a profit of Rs 760.1 crore a year earlier, while revenue increased 43.7 percent to Rs 859.6 crore.
Technically, Wockhardt has rallied twice in the recent past. Once from about Rs 290 in mid-November to about Rs 569 at the end of December, gaining 95 percent, and then doubling from Rs 400 at the end of March to Rs 804 in two months.
“The stock has witnessed a decent correction thereafter to bottom out and take support near 515 levels and has shown stability. After a short consolidation phase witnessed, currently it has indicated a series of positive bullish candles to show strength and improve the bias significantly,” said Vaishali Parekh, assistant vice president - technical research at Prabhudas Lilladher. “The RSI (relative strength index) indicator is well placed and indicating a trend reversal to signal a buy. Our view for a positive bias is justified technically, with the daily chart looking attractive.”
Parekh suggested buying the stock and accumulating it for two to three months for an expected target of Rs 700 to 780, keeping the stop-loss at about Rs 520.
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