Technical Analysis Case Study: multibagger stock poised for a bullish run, company reported 500 per cent profit growth!
It is a Mid-cap stock with market capitalization of Rs 1,543 crore. Company is almost debt free and maintaining a healthy dividend payout of 51.0 per cent.
Case study of "Onward Technologies Ltd" - Technical Analysis
In this technical analysis case study, we will explore a potential breakout opportunity in a stock named Onward Technologies Limited that exhibits a Darvas Box pattern, strong bullish momentum, and an overall Higher High-Higher Low (HH-HL) formation. The stock is trading at all-time high (ATH) levels, has experienced a successful bounce from the support zone, and displays a price-volume breakout on Thursday’s trading session. The analysis suggests another bullish run after breakout, the immediate support level is Rs 650.
The Darvas Box pattern is a classical charting formation indicating a consolidation phase before a potential breakout. The previous instance of this pattern resulted in a notable upside move after a breakout accompanied by a surge in volume. The current formation of the Darvas Box suggested a similar potential for a breakout and happed so.
The stock is currently experiencing a robust bullish momentum, evident from the Higher High-Higher Low (HH-HL) structure. This pattern reflects a series of ascending peaks and troughs, indicating sustained upward momentum. This bullish trend is a positive signal for potential investors.
The fact that the stock is trading at its all-time high levels suggests that investors have confidence in the company's performance. The proximity to ATH levels adds to the bullish sentiment and signals the possibility of an upward breakout sustenance and further bull run.
The stock has undergone a successful retest from the support zone, indicating that buyers are actively supporting the stock at lower levels. This reaffirms the strength of the overall bullish trend and provides a solid foundation for the breakout.
A key indicator for the breakout is the price-volume breakout near resistance. This implies that market participants are showing increased interest and activity around the current price levels, which could trigger a significant move when coupled with a breakout.
Onward Technologies reported robust standalone Quarterly Results for September 2023, with net sales surging by 13.46 per cent to Rs 87.09 crore compared to Rs. 76.76 crore in the same period last year. The quarterly net profit witnessed an extraordinary leap of 559.55 per cent, reaching Rs 7.99 crore from Rs 1.21 crore in September 2022. EBITDA also demonstrated significant growth, standing at Rs 14.22 crore, a remarkable 165.79 per cent increase from Rs 5.35 crore in the corresponding quarter of the previous year. The impressive financial results translated into an earnings per share (EPS) surge to Rs 3.57 in September 2023 from Rs 0.55 in September 2022. Onward Tech's shares, reflecting the company's outstanding performance, closed at Rs. 665.55 on December 15, 2023, on the NSE, marking a remarkable 36.74 per cent return over the last 6 months and a multibagger returns of 116.05 per cent over the last 12 months.
The analysis identifies an immediate support level at 650. A successful breakout may consolidate above this level, accompanied by substantial volumes, is crucial for confirming the upward momentum and signalling a potential continuation of the bullish trend.
About Company
Onward Technologies Ltd. engages in the provision of engineering design and IT services. It is a Mid-Cap stock with market capitalization of Rs 1,543 crore. Company is almost debt free and maintaining a healthy dividend payout of 51.0 per cent.
Disclaimer: The article is for informational purposes only and not investment advice.
DSIJ offers a service 'Technical Advisory Services' with recommendations for best swing trading stocks based on research and analysis to help subscribers make healthy profits. If this interests you, then do download the service details pdf here