While the broader market index has shown a good rally in today’s session after 4 consecutive days of losses, some stocks have also cheered the improving sentiments. Intraday rallies were witnessed by many counters, however, some special stocks ended up delivering a massive breakout on the charts.
One such counter is Dhunseri Petrochem Ltd (NS:) which is a specialty chemicals company having a product portfolio of various grades of PET that find application in sectors, such as packaged drinks, alcoholic beverages, edible oils, pharmaceuticals etc. The company has a market capitalization of INR 899 crores and its share price trades at a P/E ratio of 2.5, compared to the sector’s average of 13.43.
The lower P/E ratio has also been a result of improved earnings, as the company clocked a revenue of INR 679.47 crore in FY22, which was 78.7% higher than the previous year. Consequently, the net income surged 54.6% on a YoY basis to INR 359.1 crores in the same period. The EPS jumped to INR 102.5 which is the highest in the last many years.
Image Description: Daily chart of DVL
Image Source: Investing.com
Coming to the weekly chart of DVL, the stock completed the formation of an inverse Head and Shoulders pattern which is a reversal pattern and propels the stock in the upward direction. However, it is also to be noted that DVL shares are not in a downtrend and therefore the emphasis of this pattern is not very high. Still, a break of a major resistance which is called a neckline of the pattern is definitely pointing to a good upside potential from here.
The stock closed the session at INR 278.45 which is the highest closing on the weekly chart since February 2022, depicting a strong momentum. Today’s breakout was also backed by a volume expansion with a total of 345.6K shares exchanging hands today, which is the highest one-day volume in over a year and almost 460% higher than the 10-day average of 61.5K shares.
As I stated earlier, the stock was already trading at higher levels and not at the very bottom, therefore I won’t be using the pattern’s targeting mechanism here. Instead, the next strong supply zone of INR 315 – INR 320 would be an ideal level till where the stock could travel.