Stock below Rs 25: This small-cap paper company registers a solid breakout and timely completion of capex; don't miss the action!

Company has completed capex of Rs.225 crore

Indian markets experienced a gap-down opening on Wednesday due to uncertain global cues. However, after the initial knee-jerk reaction, a notable recovery has taken place from the day's low. Currently, the Nifty 50 and Sensex are both trading with a minor loss of 0.25 per cent and 0.15 per cent, respectively.

Moving on to the broader market indices, the Nifty Midcap and Small-Cap indices have demonstrated relatively better performance compared to the main indices. The Nifty Small-cap index is trading up by 0.25 per cent, while the Midcap index has only dipped by 0.10 per cent. This strength in the broader market indices has led to specific stock movements on the trading floor. One such stock that has captured the attention of market participants is Genus Paper & Boards Ltd. This company is primarily involved in the manufacturing of Kraft papers.

Remarkably, despite the market's fragility, this stock has surged over 10 per cent. Beginning at Rs 18.25, it touched an intraday low of Rs 17.15, and it's currently trading at the day's highest level. This impressive price action has resulted in a resolute breakout after an eight-month-long consolidation phase. Significantly, this breakout is supported by robust trading volumes. In the first half of the trading session, the stock has witnessed a trading volume of over 30 lakh shares, which is three times the 10-day average volume and four times the 30-day average volume. Such a surge in volume during the breakout indicates a strong upward momentum and inherent strength.

Furthermore, the stock is trading above its short-term moving average, the 20-day moving average, and is on the verge of forming a 'Golden Cross.' A 'Golden Cross' is a bullish technical signal that occurs when the 50-day moving average crosses above the 200-day moving average. This phenomenon suggests a potential longer-term uptrend for the stock.

Technical indicators also favor a bullish outlook for this stock. The Relative Strength Index (RSI) has achieved a new swing high, aligning with the price breakout, which is a strong bullish indication. The Moving Average Convergence Divergence (MACD) line is positioned above the zero line, signaling bullish momentum. The daily Average Directional Index (ADX) stands at 26.7, indicating a robust trend strength, with the positive directional indicator (+DI) significantly surpassing the negative directional indicator (-DI) and ADX, further confirming strong bullish strength.

Company has completed capex of Rs.225 crore in FY22. This includes Rs.118.00 crore towards acquisition of NS Papers Limited (an existing paper manufacturing unit in Muzaffarnagar with an installed capacity of 66,000 MTPA (Metric tonne per annum) of kraft paper and 74,250 MTPA of duplex paper), Rs.82.00 crore for capacity expansion of Muzaffarnagar Unit (kraft paper capacity increased from 66,000 MTPA to 1,32,000 MTPA and duplex paper capacity increased from 74,250 MTPA to 1,00,000 MTPA), Rs.20.00 crore towards capacity expansion of Moradabad unit from 1,40,000 MTPA to 1,52,000 MTPA, and remaining for regular maintenance capex.

Taking all these factors into consideration, it might be prudent to add this stock to your watchlist.