Shares of Murugappa Group company CG Power and Industrial Solutions Ltd rose for the fifth straight session to hit another 52-week high on Wednesday.
The stock gained another 1 percent on Wednesday to hit a 52-week high of Rs 362 on Wednesday. The stock has gained nearly 20 percent over the last month.
The recent rally was triggered after the company announced its March quarter earnings, during which it declared that it has turned debt-free, thereby boosting investor sentiment. Earnings were aided by an increased demand for its products.
Consolidated revenue rose to Rs 1,903 crore in the March quarter, up 28.2 percent compared with a year ago. The rise in revenue was mainly driven by increased sales from the motor and railway division.
The company’s reported profit after tax (PAT) surged 282.4 percent to Rs 426 crore compared with the year-ago quarter on account of better price realizations and softening input prices.
CG Power also paid an interim dividend of Rs 1.5 per share after a seven-year gap, which was seen as a positive signal by investors.
In its report dated May 19, brokerage firm Geojit BNP Paribas advised investors to ‘hold’ CG Power with a price target of Rs 363.
“With a focus on reducing its debt, the company has achieved a debt-free status. This, along with product diversification and upgraded manufacturing facilities, is expected to enhance its order book and support growth,” said the brokerage firm.
However, it added that the stock was trading at high valuations, thereby having limited upside potential in the near term.
"The stock looks overbought at these levels. RSI divergence also shows the same. Around Rs 392 there is a strong resistance so we advice to book profit around 390. While on other hand Rs 280 is also a strong support," said Vaibhav Kaushik of GCL Broking. He advised clients to buy on dips near the Rs 300 mark with a stop loss of Rs 279 and a price target of Rs 392.
Shares of CG Power are trading 1 percent higher at Rs 360.95.
