Stock in Action – Mishra Dhatu Nigam Ltd

Stock in Action – Mishra Dhatu Nigam Ltd
Stock in Action – Mishra Dhatu Nigam Ltd

Fundamental & Technical Analysis
by Tanushree Jaiswal Last Updated: Feb 22, 2024 - 10:18 pm 247 Views
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Mishra Dhatu Nigam’s Movement of Day

Mishra Dhatu Nigam’s Intraday Analysis    

1. Stock currently exhibits bullish momentum with notable increase in volume, indicating strong investor interest. 
2. VWAP stands higher than current price, suggesting potential upward movement. 
3. Pivot levels show immediate support at 409.00 & resistance at 437.70. Moving averages depict short-term bullish trend as 5-day SMA is above 10-day SMA. 
4. Despite recent dip, stock has shown significant long-term growth, with 117.69% increase over past year. 
5. However, stock's recent decline over one month could signal short-term bearish sentiment.
6. Overall, stock's technical indicators suggest potential for further upward movement, but investors should remain cautious & monitor stock's price action closely.

Probable Rationale Behind Surge

1. Recent surge in shares of Mishra Dhatu Nigam Ltd (MIDHANI) & MTAR Technologies Ltd can be attributed to significant amendments made in Foreign Direct Investment (FDI) policy in Indian space sector. 
2. Indian government's decision to liberalize FDI in various sub-sectors/activities of space industry, including satellite manufacturing & operations, has injected optimism into market.
3. Government’s new policy allows up to 100 per cent FDI in satellite sub-systems & manufacturing components, aiming to attract global investment, boost private space industry, & enhance capabilities in space exploration & satellite technology.

Recent Financial Performance Analysis

Mishra Dhatu Nigam Ltd (MIDHANI) reported standalone quarterly numbers for December 2023, showcasing mixed financial performance.

While net sales increased by 8.85% from December 2022, reaching ₹251.98 crore. new FDI policy by government has played vital role in increment of sales of defence sector companies.

Quarterly net profit witnessed decline of 7.14% from previous quarter, standing at ₹12.49 crore.

Similarly, EBITDA stabilize to December 2023, reaching ₹ 36 crore. Despite stability in profitability metrics, MIDHANI's shares closed at ₹459.90 on February 9, 2024, indicating substantial returns over past 6 & 12 months.

Financial Position Analysis for MIDHANI

Net Worth: ₹  1,319 Crore (up 3% from March 2023)

1. The company's net worth has shown steady growth from ₹834 crore in March 2019 to ₹1,319 crore in September 2023, indicating consistent financial strength & value creation. 
2. To sustain this positive trend, company should focus on maximizing profitability, optimizing resources, & exploring strategic growth opportunities.

Borrowings: ₹498 Crore (Up 1.84% from 2023)

1. Company's borrowings have increased significantly from ₹107 crore in March 2019 to ₹498 crore in September 2023, suggesting heightened leverage which may impact net worth growth.

2. To mitigate risks & ensure sustainable growth, strategic focus on debt management, prudent financial decisions, & improving cash flow generation is imperative.

Total Assets: ₹ 3,109 (Up 8% from March 2023)

1. Company's total assets have consistently increased, reaching ₹3,109 crore in September 2023, indicating potential for sustained net worth growth through effective asset utilization & capital allocation strategies. 
2. To optimize net worth growth, continued focus on asset quality, efficient resource deployment, & strategic investment decisions is essential.

Factors Driving Growth

Surge in MIDHANI's shares can be attributed to its pivotal role as key supplier of specialized metals & alloys for ISRO's solar mission. Being primary supplier for Aditya-L1's launcher vehicle, PSLV-C57, MIDHANI has significantly contributed to India's space endeavors. This achievement, coupled with government's focus on indigenization & increasing usage of electronics in defence & space, has bolstered investor confidence in MIDHANI's growth potential.

Conclusion

Amendments in FDI policy in space sector have provided significant boost to companies like MIDHANI & MTAR Technologies, leading to surge in their stock prices. With government's emphasis on attracting global investment & enhancing capabilities in space technology, these companies are poised for further growth opportunities. However, investors should exercise caution & conduct thorough research before making investment decisions, considering both potential opportunities & risks associated with these stocks.
 

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About the Author

Tanushree is a seasoned professional with 6 years of experience in the Fintech and Edtech industry.

Disclaimer

Investment/Trading in securities Market is subject to market risk, past performance is not a guarantee of future performance. The risk of loss in trading and investment in Securities markets including Equites and Derivatives can be substantial.
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