A Powerful Positive Breakout is Seen in this Stock; Do You Hold it?

 A 200-points rally in the NSE benchmark Nifty50 index has not only recouped from Friday’s crash which was led by index heavyweight stocks like HDFC twins but it has managed to log a fresh swing high of 18,286.95. Almost all sectors contributed to today’s rally and one stock from the sanitaryware industry has grabbed investor’s attention by rallying more than 3.5%.    

The stock is Cera Sanitaryware Ltd, engaged in the business of manufacturing, selling and trading of various kinds of building products. It offers sanitary ware, faucets, tiles, shower, kitchen sinks, mirrors, wellness and personal care products. It also has non-conventional wind & solar power for captive use in the state of Gujarat.     

It is almost a debt free company, maintaining a healthy dividend pay-out of 20.6% having a market cap of around Rs 8000 crore. In the last 5 years compounded sales growth is at 7%, ROE at 16% and compounded profit growth at 9%, lastly, the stock price CAGR is at 16%. Improvement is also seen in debtor days from 57 days to 41.5 days.     

Technically, the stock has been seen trading in a range of Rs 6788 on higher side and Rs 5882 on lower side by making equal highs and equal lows from February 2023. In the last 5 days it has bounced from the lower end of the range and the stock has rallied more than 10%. The stock is on verge of registering a breakout of this consolidation range and it is ready to make a new high.    

Currently it’s trading at Rs 6715, around the day’s high. Closing above the level of Rs 6788 will confirm this breakout. Volume cluster on daily charts is also supporting this up move. All short term and long-term key moving averages along with 14-day period RSI (65) placed in super bullish zone indicate strong momentum. The measured move target suggests that the stock has potential to rise 15% from current levels.     

Considering all these factors, you can expect follow-up buying in the upcoming session. Investors looking for opportunities in the sanitaryware industry can track this stock closely.