High beta stock: GM Breweries gives nice breakout to trade close to its 2-year high

GM Breweries managed to give a nice breakout on Friday when the stock made a fresh 52-week high for itself at Rs 552.90 per share.

GM Breweries managed to give a nice breakout on Friday when the stock made a fresh 52-week high for itself at Rs 552.90 per share. The best part of the story is that the stock managed to close near its 52-week high. Some might even consider it a bullish signal.  

GM Breweries has come out with excellent results this season with its net profits increasing by 114 per cent while revenues reflecting growth of 328.66 per cent, which is highest in the last three years. However, the profit margins have declined this quarter compared to the previous one. 

With a PE of 11.96, GM Breweries is not expensive. The stock is up by 19.4 per cent in one year while most of its gains have come in the past one month, when it gained more than 28.96 per cent, indicating its underperformance over longer run and outperformance in recent trades.

GM Breweries carries a beta of 1.25 and can be considered risky as it can fall more than the market when the market corrects.

GMBL is engaged in the activities of manufacturing and marketing alcoholic beverages, such as country liquor (CL) and Indian-made foreign liquor (IMFL). GM Breweries enjoys a good market share for its products in Maharashtra.