Dhampur Sugar Mills Ltd has been on the buyers’ list in 2021 as the stock more than doubled investors’ wealth so far in 2021 compared to over 13 percent rise seen in the Nifty50 in the same period.
In the past year, it rose 163 percent while the benchmark index rose 61 percent. The stock is part of the Smallcap index which rose 113 percent in the last year.
The stock is consolidating in a narrow range after it hit the 52-week high of Rs 369.45 on June 9, 2021, but experts feel that buying participation can be seen in the stock at lower levels.
Technical indicators suggest that the stock is on the verge of making a fresh 52-week high, and it can be bought on dips or at current levels for a target of Rs 450-500 which translates into an upside of nearly 30 percent from Monday’s closing price of Rs 347, suggest experts.
Dhampur Sugar Mills (Dhampur) is one of the leading integrated sugarcane processing companies in India. Its portfolio extends beyond sugar to includes renewable power, alcohol, extra neutral alcohol, alcohol-based chemicals, and biofertilizers.
“On the technical front, the stock has formed ‘W’ shaped pattern which is a bottoming out pattern as shown in the chart (dotted line) over a three-year period,” Ashish Chaturmohta, Head of Derivatives and Technical Analysis, Sanctum Wealth Management said.
‘W’ shaped pattern or double bottom pattern are important chart patterns used by technical experts. A double bottom which often resembles the letter ‘W’ signals a bullish price movement in the underlying which could be a stock or an index.
The stock hit a new all-time high in early May on high volumes and the momentum continues in June indicating buying participation in the stock. But, after hitting a high the stock has been trading in a range above around the breakout on low volumes consolidating its gains,” explains Chaturmohta.
“Typically these kind breakouts happen in the direction of the previous trend, thus in case resuming its uptrend. The stock can be bought with a stop loss of 310 for the target of 450-500,” he added.
Dhampur has a crushing capacity of 45,500 metric tonnes of cane per day. It has a capacity to produce 1,700 MT per day of refined sugar, the company website said.
The company reported a marginal fall in revenue on a year-on-year basis for the quarter ended March 2021. The fall in revenues was more on account of inter-company adjustments, said a media report.
Sugar has generally been a seasonal industry and follows the typical sugar cycle year of October to September. The net profit for the March quarter stood at Rs 91.45 cr.
Disclaimer: The views and investment tips expressed by the investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.