NLC India Ltd_Long Setup_Daily_15.5.2017

15 мая 2017 г.

NLC India Ltd
15.5.2017

Trade
Company Profile:
NLC India Ltd. is engaged in the mining and exploration of lignite and generation of thermal power in India. The company owns opencast mines and thermal power stations. It supplies power to diverse industries such as electricity boards, cement companies and paint companies, in addition to other small sectors and brick industries. NLC India also in the generation of thermal power through its thermal power stations comprising 3 thermal power stations. The company was founded on November 14, 1956

Overview:
It's current Price/Book of 1.09 is about median in its peer group.
The market expects NLC India Ltd to grow at about the same rate as the peers and to maintain the median returns it currently generates.
NLC India Ltd has relatively high profit margins while operating with median asset turns.
Changes in annual revenues (relative to peers) are better than the change in its earnings (relative to peers), implying the company is focused more on revenues.
NLC India Ltd return on assets currently and over the past five years suggest that its relatively high operating returns are sustainable.
The company's relatively high pre-tax margin suggests tight control on operating costs versus peers.
While NLC India Ltd revenues growth has been below the peer median in the last few years, the market still gives the stock a P/E ratio that is around peer median and seems to see the company as a long-term strategic bet.
The company's level of capital investment is relatively low and suggests it is milking the business.
NLC India Ltd seems to be constrained by the current level of debt.

Date of Trade (Time if applicable): 15th May 2017

Entry Date: Buy Stop

Trade Entry
Market: BSE
Stock: NLC India Ltd - NLCINDIA
Long/Short: Long

Current Price: 107.20

Entry Price:114.50
Time Frame: Daily

Type of Trade: Swing trade

Reason For Trade:
Fundamentally Strong Stock
RSI is above 50 i.e at 56.5. According to RSI analysis, NLCndia just got above it's resistance level and showing good signal.
MACD: MACAD is crossing over the zero line. 0.113 and Signal Line: 0.153. According to MACD analysis, a centerline bullish crossover just happend and it's a positive signal.
Price is above 50 and 200 SMA
Book Value is 106.91. Price is near its book value
RSI has crossed 20 SMA
Price is above 50 and 200 SMA

Stop: 109.85

Target 1: 122 (Majority shares should be sold at this price)
Target 2: 150

Pluses:
Stock is trading at 0.97 times its book value
Stock is providing a good dividend yield of 3.17%.
Company has been maintaining a healthy dividend payout of 33.67%
Monthly chart is neutral slightly tilted toward bullish sentiment.


Minuses:
The company has delivered a poor growth of 9.19% over past five years.
Company has a low return on equity of 9.53% for last 3 years.
Contingent liabilities of Rs.5091.25 Cr.
Negative cash flow in recent years
Weekly chart is indicating start of downtrend (MACAD).