Shall I Buy Sterlite Technologies ( Analysis with Charts )
Congratulations to all of us who stayed patient during the consolidation phase of market from last few months and now its time for celebration as market is inching towards new highs. Though most probably market is going to be volatile till general elections MAY 2019, it is not new that after this election stock market will start its new bull run. In this scenario today we will discuss about a stock which is a big beneficiary of the outcomes of this general elections. Read till the end.
Today we will discuss about Sterlite Technologies.
About the company
Sterlite technologies basically designs, builds and manages "smarter networks". It develops optical communication products network and system integration services and software solutions for telecoms globally.
It is India's only integrated Optical Fiber Producer and one of the largest suppliers of optical fibers to overseas markets in China, Europe and South East Asia. That means we can say it has monopoly in India's market. Monopoly means where there is no competition. So this is a kind of dream situation for any business and our stock is one of them.
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Why Sterlite Technologies is falling?
For this question I will like to say in points so that you will understand it better.
First, promoters of this company have pledged their shares and this is one of the biggest cause of the recent fall of this stock.
But hold on! This is nothing new to stock market. Promoters do this for fund arrangements and in a very recent interview management said that pledging of shares by the promoters are short term in nature and all pledged shares should be released from the company within this time period. So I don't find anything to worry for this news.
Second reason is the delay in the China mobile tender. There are spurred price wars for this tender and now suppliers had to bid at least 35% lower than the price cap to win. This is a concern but again management clarified that China’s sales only account for 6%-7% of company’s revenue. Most importantly I think this news is already discounted in share’s price.
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Is it the right time to buy?
This depends upon what you think. Again I will just give reasons to buy and ultimately you will decide whether to buy or not.
1.As already mentioned, this is the only integrated Optical Fiber Producer in India. We all know that how much government is focused towards digital India. No matter who will win the election but definitely this company will get benefits in future and this is my strongest reason to buy this stock.
2.Management has maintained its guidance of 35-40% revenue growth for both FY19-20. This kind of growth will boost the share price in future.
3.Let’s see the weekly chart to know its technical price points.
As you can see that this stock is coming towards its support zone. There is a strong support in weekly chart near 200-210. Stock is currently trading 230. On the upper side it has resistance around 275-280. If it manages to break this level, then definitely it will fly. So from technical point of view you can either buy now or wait for 210-220 so that you have less rick and more reward. But this doesn’t have any impact for long term investors.
So this was my analysis on Sterlite Technologies. If you want to add something, then type in comment box. I will be glad to hear from you. This is all for today.
Stay happy, stay healthy and happy investing.
( Disclaimer - I have this share in my portfolio )