Dividends despite loss: Will this heavy-machinery stock prove its worth to the investors?

Windsor Machines has soared over 20 per cent in the last 2 weeks amid fresh buying interest   

Microcap and Smallcap stocks have a reputation of being a “high risk high reward” game for investors. Their profitability is uncertain and the companies are always cash-crunched. But have you ever wondered how a company is able to deliver healthy dividends despite losses? Let’s understand the story of Windsor Machines.  

Windsor Machines (NSE Code: WINDMACHIN) is engaged in the business of plastic processing, which is diversified across 65 countries with a base of over 30,000 machines. It adheres to cutting edge product design and latest technology, wherein it manufactures injection moulding, pipe extrusion and blown films machineries.   

Looking at the fundamentals, the company was not able to post profit in the June quarter and incurred a loss of 10 crore. The revenue grew nearly 13 per cent YoY to Rs 54.42 crore in Q1FY23 as against 48.20 crore in Q1FY22. Meanwhile, the company offers an attractive dividend yield of 2.41 per cent. Even though the profitability looks dented, the free cash flow to the company has been able to cover the dividend. The plastic processing business has a strong demand outlook for the future and the company expects to make strong use of it.   

Interestingly, the stock has jumped over 20 per cent in the past two weeks, backed by massive volumes and has attracted investors. Technically, it has registered a breakout from its 26-week cup pattern. Such breakout is considered strongly bullish over a medium term. The volumes have risen for the third consecutive week, indicating larger buying interest. On November 4, over 4 lakh shares have been traded which is above average. The stock trades above all its key moving averages and all the moving averages are in an uptrend. To support the bullish bias, the 14-day RSI and ADX have shown strong trend in the north direction.   

Clearly, investors are finding the stock to be appealing in the current scenario. The Windsor Machines stock price is trading at Rs 45 per share. We can witness strong price action in upcoming weeks so one should keep a close eye on this stock!