Stock below Rs 100: This diary stock registers a solid breakout; operating margins turn positive for the company!

The growth was supported by recovery in SMP volumes and higher realisations.

Indian benchmark indices displayed a subdued performance on Thursday, with the Nifty and Sensex experiencing slight declines of 0.28 per cent and 0.27 per cent, respectively. However, amidst this, a sense of positivity prevailed in the broader markets, as the Nifty Midcap and Small-Cap 100 indices witnessed gains of 0.39 per cent and 0.57 per cent, respectively.

The market sentiment leaned towards the optimistic side, with more stocks advancing than declining. On the NSE, over 1000 stocks were in the green zone, while approximately 934 stocks were in the red. Amidst this overall buoyant atmosphere, one particular stock that has caught the attention of market participants is Umang Dairies Ltd.

Umang Dairies, classified as a micro-cap company with a market capitalization of Rs 162 crore, has been creating ripples in the market today. It surged over 5 per cent and accompanied this rise with strong trading volume. The total volume traded so far exceeded 3 lakh shares, marking the highest volume in the last four trading sessions.

The stock's recent behavior adds to the intrigue. On July 20, it formed a substantial bullish candlestick pattern, and subsequently, its price remained within the high and low range of this candlestick, resembling what is referred to as a 'Mother Bar.' Notably, on Thursday, the stock managed to surpass the high of this mother bar, effectively triggering a breakout. This breakout was notably accompanied by robust trading volume, which enhances the positive outlook for the stock.

Furthermore, the stock is currently trading above its 20, 50, and 200-day moving averages (DMA), and notably, all these moving averages are trending higher and maintaining a desirable sequence.

The Relative Strength Index (RSI) for a 14-day period has exhibited a bullish crossover above its 9-day average and has consistently stayed above this average. This serves as an additional indication of the positive sentiment surrounding the stock. Similarly, the Moving Average Convergence Divergence (MACD) indicator on a daily chart is trending upwards while staying above its 9-day average, further substantiating the positive sentiment surrounding the stock.

The revenue of the company increased by over 40 per cent in FY23 to Rs 293 crore, albeit on a lower base of previous fiscal. The growth was supported by recovery in SMP volumes and higher realisations. While the operating margin turned positive in fiscal 2023, it remained muted at 1.2 per cent which is much lower than the historical levels due to higher milk procurement prices.

In light of these factors, market participants are advised to monitor this stock, particularly since it is currently trading below Rs 100.