Long Term Equity Call - GHCL Ltd 24 Oct 2016

LONG TERM EQUITY PICK - GHCL LTD. (GHCL)

CMP - 276.00

Past 2 year weekly trend

In past 6-7 months, the stock has continuously been in bullish phase.

Reading Trend first -

Upward movement can be clearly seen. Expected to reach 320--330 in short term. (Forming Harami Bullish)

Next, reading Technical Indicators - 

• Short Term Moving Averages (5, 10) - suggest selling which is the reason why the stock fell on 21 Oct.
• Other Short Run Moving Averages (20, 50, 100, 200) - Suggest Buying.
• RSI (14) - Neutral option.
• MACD (26, 12) - Suggest buying.
• William %R - suggests buying.

• Long Term Moving Averages (5, 10, 20, 50, 100, 200) - All suggest Buying.
• RSI (14) - Overbought stock. - High demand.
• MACD (26,12) - Suggests buying.
• William%R - Overbought stock.

Overall, technical indicators suggest buying for long term and so does trend.

Next, reading Financial Indicators - 

• Has continuously shown growth in Terms of Revenue and Net Income. (Source - GHCL-Moneycontrol.com). With net income of 183.02 crores for year 14-15, it had a net income of 256.62 crores for the year 15-16.
• Increasing Operating Cash Flows for past 3 years. (Link). 519.88 crores in 15-16 as against 289.92 in 14-15. Tremendous growth shown.
• Price to Cash Flow Ratio of 11.37 as against industry's 49.07 shows that it is comparatively undervalued.
• EPS of 25.76 against Industry's 22 makes it more profitable and gives it a competitive advantage.
• Talking of Dividend, at last - 
• Dividend Yield of 1.26% against industry's 0.91%
• Average 5 year's Dividend yield is 4.17% against Industry's 1.23%
• Dividend Growth Rate of 20.51% against Industry's 18.06%

Overall, Financially, the stock shows positive indications for a rise in future.

Short Term Open Target - 320--330 (approx 16%)

GO LONG, EXPECTED TO TOUCH 450 LEVELS IN A FEW MONTHS.

Keep a watch on your investments since the market is uncertain and highly volatile. The stocks show corrections in Long phases. Patience is key for Long Term investments.

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