Sometimes, fundamental analysis and technical analysis will be at odds with each other. Nilkamal [stockquote]NILKAMAL[/stockquote] is a case in point.
Looking at its long term chart, one could argue that there is a slight uptrend. It seems like the stock tested the trend a few times and managed to hang on to it. However, is it the best possible bet amongst all other stocks you could possibly invest in? Lets see what Globe Capital has to say about it:
- Dominant player with a market share of ~40%
- Wide distribution network
- Holds market leadership in material handling equipment business (MHEB)
- Promising industry outlook
Of these, only #3 and #4 are about the future of the company, #1 and #2 are probably already priced in. However, without knowing how much of its revenue and profitability is derived from MHEB, it is impossible to take a call based it.
To its credit, Nilkamal has tried to get out of the commodity plastic furniture business through its @home brand. However, with an operating profit of Rs. 34.39 crores on net sales of 380.47 crores (9% margin), I think it deserves the ~5 PE it is trading at.
Short-term technicals don’t hold out much hope either. Even though RSI is at over sold levels, MACD and Abhishek’s favorite Guppy Lines are not showing any upside.
To summarize: Avoid Nilkamal. There are bigger fish in the sea.
Abhishek will be back on Friday with his Technical Analysis posts.
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