Stock Gaining Upside Momentum Amid ‘52-Week Low’, Rises 6%!
Ignoring the weak market sentiments, the share price of Sona BLW Precision Forgings Limited (NS:) was in its own league today. The company is in the business of designing, manufacturing and supplying engineered automotive systems and components, having a market capitalization of INR 26,038 crores.
The company has been delivering stellar growth for the last 5 years. The FY22 revenue figure surged to the highest ever, at INR 2,163.94 crores with a 5-year CAGR of 33.7%, compared to the sector’s average of 7.55%. Consequently, profit also grew to the highest ever, at INR 361.55 crores. Its Q3 FY23 figures also impressed the street as the company reported a 39% YoY revenue growth to INR 685 crores while profit after tax surged 45% YoY to INR 107.1 crores. These stellar numbers led the stock to surge over 5% after the result day.
Image Description: Daily chart of Sona BLW Precision Forgings
Image Source: Investing.com
Coming to the technical setup, the stock had faced decent selling pressure in the past, falling 28.5% in the last one year, compared to the index return of 17.1% in the same period. Shares of Sona BLW Precision Forgings hold a weightage of around 2.09% in the Nifty Auto index.
This underperformance seems to be coming to an end as the stock is finally giving signs of a reversal. After making a 52-week low of INR 398.05 on 26 December 2022, it has started to rise in a higher high and higher low (HH &HL) pattern, a classic uptrend formation. Also, today’s high of INR 477.9 is the highest level since mid-December 2022, indicating the current momentum. As of today’s closing of INR 471.4, the stock has already jumped over 18% off the low.
In a short time frame, one could draw a falling trendline connecting the peaks formed on 20 October 2022 and 14 December 2022. With today’s rally, this resistance has been breached which is further strengthening the upside view. The stock could retrace a bit from the CMP but the broader structure seems positive and the recent 52-week low is most probably the bottom for now.
A level of around INR 520 could soon be on the screen if the momentum continues. On the downside, a level of INR 440 can be used as an exit level in case the stock takes a U-turn.