WHICH SECTOR WILL PERFORM BETTER IN COMING MONTHS?
- Stocks / Sector in the top right quadrant has positive relative strength and positive relative momentum. We pick pharma as it will outperform the benchmark index Nifty in the coming months.
Buy NECTAR LIFESCIENCES
|Buy Range||10 – 11.2|
|Target||32 – 45|
|Duration||1.5 – 2 Years|
|Potential Returns^||202 – 325%|
|CP#||Idea||Buy Range||Target||StopLoss*||Duration||Potential Returns^|
|11.1||BUY||10 – 11.2||32 – 45||8.5||1.5 – 2 Years||202 – 325%|
# CP – closing price on March 05, 2020
* Maintain recommended StopLoss by daily closing basis.
Once 1st target hit, reset StopLoss at 20.
^ Potential returns are calculated based on the median of buy range.
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COMPANY OVERVIEW - Nectar Lifesciences Limited
Nectar lifesciences limited engaged in manufacturing and selling pharmaceutical products in India and internationally. The company offers contract research and manufacturing services, including process development and optimization, preparation and submission of drug master files, chemical and analytical development, as well as manufacturing and engineering consultation services. The company manufactures Cephalosporin Active pharmaceutical ingredients, finished dosage forms, Phytochemicals, and hard gelatin capsules at their facilities spread across three Indian states of Punjab, Himachal Pradesh and Jammu. They have developed sustainable production systems to manufacture high-quality intermediates and APIs to meet the diverse requirements of their customer base across the world.
The company reported a consolidated net profit of Rs 8.22 crore for the quarter ended December 2019, compared to Rs 2.45 crore reported during the earlier quarter of September 2019. A whopping 235% jump in net profit.
|Sectoral Index||Nifty Pharma|
NECTAR LIFE SCIENCES TECHNICAL ANALYSIS (MONTHY)
- Presently, the stock price has placed just above the multiyear support (orange coloured line).
As seen in the historical monthly chart, we had witnessed the stock was moving higher high after taking this strong support base.
In 2020, we are expecting the same upside movement followed by 2006, 2009 and 2013.
NECTAR LIFE SCIENCES TECHNICAL ANALYSIS (WEEKLY RSI DIVERGENCE)
- Found positive RSI divergence in weekly chart.
A positive divergence occurs when the underlying security makes a lower low and RSI forms a higher low. RSI does not confirm the lower low and this shows strengthening momentum.
NECTAR LIFE SCIENCES TECHNICAL ANALYSIS (WEEKLY MACD DIVERGENCE)
- We can see a bullish divergence between the MACD (12, 26) technical indicator and price which often produce excellent trading opportunities.
A divergence takes place when the MACD indicator contradicts price. In this case of bullish divergence, the MACD indicator makes a low and then a higher low – indicating that momentum is moving to the upside. At the same time price makes a low and then a lower low.
NECTAR LIFE SCIENCES TECHNICAL ANALYSIS (WEEKLY OBV DIVERGENCE)
- When you first look at the price of Nectar Lifesciences shares, you think we have a lower high, lower low so it seems the downtrend would continue. But, if you pay attention to OBV indicator, you realize the volume flow is stabilizing, and OBV is not falling anymore, which means the stock accumulation phase is going on at lower price zone.
NECTAR LIFE SCIENCES TECHNICAL ANALYSIS (DAILY RSI)
- The daily RSI (14) corrected from below oversold levels and now came above 30, which is showing bullishness.
NECTAR LIFESCIENCES - KEY FUNDAMENTAL FACTORS
At the current stock price and financial performance Nectar Lifesciences has Attractive valuation. And at the same time, undervalued with adequate balance sheet.
- A small cap stock having Market Capital of 245.38 Crore.
Small-cap shares are counted among the top-yielding investments options as they are considered to have potential to emerge as multi-baggers by yielding over 100% returns.
- Debt-to-Equity Ratio Lowest at 0.73 in the last five year periods.
Less than 2 is Good | Greater than 2 is Not Good
Debt-to-equity ratio is the key financial ratio and is used as a standard for judging a company’s financial standing. It is a measure of a company’s ability to repay its obligations. If the ratio is increasing, the company is being financed by creditors rather than from its own financial sources which may be a dangerous trend. Lenders and investors usually prefer low debt-to-equity ratios because their interests are better protected in the event of a business decline.
- Cash From Operation improved by 267.10% in the year ended Mar 2019 vs -67.21% in Mar 2018.
- Debator’s Turnover Ratio highest at 5.77 in the last five years.
The ratio is used to measure how effective a company is at extending credits and collecting debts. Generally, the higher the accounts receivable turnover ratio, the more efficient the business is at collecting credit from their customers.
- Nectar Lifesciences has strong financial health means that all of its upcoming liability payments are able to be met by its current cash and short-term investment holdings.
- Promoter Pledged Share holding is ‘0’ which is very good.
A high level of promoter pledging indicates the poor financial health of a company and probably a situation that a company is unable to raise funding from other sources or promoters being cash-strapped in their personal capacity or facing debt problems in other group ventures.
- Nectar Life Sciences is currently trading below its true value, which means the market is undervaluing the company’s expected cash flow going forward.
- The stock NECLIFE is also trading below its peers, relative to earnings generated. This further reaffirms that NECLIFE is potentially undervalued.
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⭐️ #Multibagger Investment Advice #119: █████#Stock price on multiyear support. #Bullish divergence found on multiple #technicalanalysis #indicators. #RiskReward ratio for this #investment is 1:10.— Gᴏᴏᴅʟᴜᴄᴋ Cᴀᴘɪᴛᴀʟ (@CapitalGoodluck) March 6, 2020
Undervalued #share with attractive #valuation.https://t.co/FXnnPHB2Ks