Multiyear breakout candidate: This small-cap can offer an upswing of 60 percent; watch out!

With net profit surging to a record high of Rs 327 crore

In the current landscape of market oscillations, a discerning approach to stock selection becomes imperative for investors and traders alike. One such entity that warrants special attention amidst this backdrop is Huhtamaki India Ltd (HIL).

Established in 1935, HIL stands tall as a vanguard of both market prowess and technological innovation within the domestic flexible packaging sector. The company's portfolio encompasses a diverse range of products including flexibles, labels, and cylinders. Notably, Huhtamaki, its parent company, holds a commanding 67.73 per cent equity stake in HIL as of September 30, 2023.

Spanning its operational footprint across ten manufacturing facilities located in Maharashtra, Dadra & Nagar Haveli, Uttarakhand, Assam, Karnataka, Andhra Pradesh, and Himachal Pradesh, HIL exemplifies a robust and widespread operational infrastructure.

From a technical standpoint, the stock appears to be on the cusp of a significant multi-year breakout, poised around the pivotal level of Rs 374. Sustaining above this critical threshold is anticipated to catalyze a noteworthy breakthrough, marking the culmination of a 73-month long consolidation phase. This optimistic outlook is corroborated by the monthly Moving Average Convergence Divergence (MACD) indicator, which exhibits a bullish trajectory while maintaining its position above the nine-period average. Similarly, the monthly 14-period Relative Strength Index (RSI) portrays a resurgence following a period of consolidation around its nine-period average, thus underpinning the prevailing positive sentiment.

Moreover, technical analysis suggests that the height of the prevailing rectangle pattern approximates 60 per cent, indicating a potential upside target commensurate with this percentage surge once the breakout materializes.

In terms of financial performance, the recently concluded Q3FY24 paints a promising picture for HIL. The company reported a robust operating profit of Rs 58 crore, with net profit surging to a record high of Rs 327 crore. It's worth noting, however, that other income has played a pivotal role in bolstering the net profit figures.

Given these compelling indicators, it would be prudent for investors and traders to keep a vigilant eye on HIL as it navigates towards potential growth opportunities in the foreseeable future.

Disclaimer: The article is for informational purposes only and not investment advice.