Welspun Corp share price more than tripled in less than a year; what should investors do?

Welspun Corp share price has more than tripled in less than a year. The stock hit its 52 week low of 177.85 on February 27, 2023, and considering the stock's closing of 558.40 on January 4, 2024, it has gained a whopping 214 per cent in less than a year. During the last six months, the stock has more than doubled investors' wealth.

On the monthly scale, the stock has been in the green since March 2023. Meanwhile, the stock hit its 52 week high of 579.40 on January 1. On Friday, January 5, the stock opened at 562.85 against the previous close of 558.40 and touched its intraday high and low of 573.40 and 558 respectively. Mint collated views of fundamental and technical experts to understand what investors should do with this stock.

Here' what they said: Fundamental view on Welspun Corp Anand Rathi Share and Stock Brokers Welspun Corp is strategically positioned to benefit from various sectoral tailwinds and government initiatives across its key geographies and business segments: (a) the Indian Government's target to increase city gas distribution by more than 50 per cent, (b) capitalising on the rising domestic and global demand for natural gas, driven by geopolitical tensions, with one year order book visibility, (c) Welspun Corp's recent foray into the highly profitable Ductile Iron (DI) pipes aligns with the 'Nal se Jal' budget outlay by the Government of India (nearly 2.6 lakh crore balance).

The company has secured a three quarter order book in this segment. The company underwent a phase of significant investment in capex and acquisitions in FY23. The capex was directed towards establishing the DI Pipes and TMT bars plant, while they also acquired companies such as Sintex and ABG shipyard during this period.

However, the company anticipates a change in the upcoming fiscal years (FY24E 26E). They don't expect significant capital expenditures during this period. As a result, Welspun Corp forecasts a considerable reduction in net debt over the mentioned period (FY24E 26E). They even anticipate a turnaround, expecting to become net cash positive by fiscal years 2025 and 2026.

The management is confident of nearly 50 per cent growth in topline to 15,000 crore and 90 per cent growth in EBITDA to 1,500 crore for FY24 based on strong growth outlook and ramp up of new business. The company expects ROCE (return on capital employed) of over 16 per cent in FY24 versus 7 per cent in FY23.

Also Read: Technical views on Welspun Corp Gaurav Bissa, Vice President, InCred Equities Welspun Corp has seen a very strong upside in the last few months outperforming its peers by a wide margin. It is currently trading above its major swing high resistance of 540 which if sustained can lead to a further upside to 650 level.

Since the momentum indicators are in deep overbought zones, it is suggested that people who have bought the stock earlier should partially book their quantity and hold the balance with a stop loss of 498. Also Read: Deven Mehata, Equity Research Analyst at Choice Broking The daily chart analysis of Welspun Corp suggests a positive outlook for the upcoming days, indicating a sustained upward trend observed over the past two weeks.

The stock price has been consolidating within a larger pattern over the last couple of months and is currently attempting to break through the 555 560 range. A successful move above this resistance level would signify a significant breakout, potentially leading to a substantial positive impact on the stock price in the near future.

Moreover, Welspun Corp is currently trading above key Exponential Moving Average (EMA) levels, including the 20 day, 50 day, and 100 day, confirming the bullish trend. The increased trading volume and the stock's position above the volume weighted average price (VWAP) at 560 further support the bullish scenario.

Also Read: For investors who entered at lower levels, it might be a prudent strategy to consider booking partial profits at the current market price (CMP). Implementing trailing stop loss orders around 540 levels can help safeguard profits and manage risks effectively. For those considering fresh investments, a disciplined approach involves waiting for potential dips and considering entry points near the 560 level.

Setting a strict stop loss at 540 level can serve as a risk management strategy. To navigate the stock's future trajectory, investors should remain vigilant regarding Relative Strength Index (RSI) dynamics and potential sideways movements. This awareness will enable investors to optimize their investment positions based on prevailing market conditions.

Shiju Koothupalakkal, Technical Research Analyst at Prabhudas Lilladher The stock has witnessed a strong bull run since April 2023 gaining almost 200 per cent, currently finding some resistance near the 580 level. The overall bias is strong with the RSI still indicating the potential to rise further and would need a decisive breach above the 580 level to confirm a breakout which can trigger further fresh upward move with the next target of 610 and thereafter 660.

As of now, the near term support is near 520 and only a decisive breach below 490 may weaken the bias. One can hold the stock as long as 490 is sustained and fresh buying can be considered once a breakout above 580 is confirmed. Read all market related news Livemint tops charts as the fastest growing news website in the world to know more.

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