Multi-Year Breakout: Small-Cap Breaks 14-Year High on Volume Jump!

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As small caps are in flavor these days with many such stocks clocking higher highs, another stock that is making a killing for investors is Ruby Mills. The company operates via two verticals - textiles and real estate. It has more than 10,000 retail outlets in the country through 200 dealers and 19 dedicated agents to support its textiles business. Some of its prominent real estate projects include five-star hotels such as ITC Parel, Grand Hyatt, Hinduja hospital, Hard Rock Cafe, etc.

The company has a market capitalization of a mere INR 785 crores and its shares are 3.41 times more volatile than the Nifty 50 . In FY22, the company recorded a revenue of INR 199.89 crores which is 49.72% higher than FY21 revenue of INR 133.51 crores. On the other hand, net income rose 20.08% to INR 31.04 crores in the same period, which is the highest profit since FY18. 

Currently, the stock is trading at a P/E ratio of 25.31, compared to the textile industry’s average of 138.45. More interestingly, the company has been paying dividends for over a decade without any miss, and currently, the stock trades at a yield of 0.64%. Apart from 74.9% of the promotor’s holdings, FIIs also own a stake of 0.05% which was nil a year ago.   

Image Description: Monthly chart of Ruby Mills with volume bars at the bottom

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Today, the share price of Ruby Mills surged by a massive 20% to INR 563.85 as investors became impatient to add the stock to their portfolios. The stock has also been delivering some quick gains earlier this month, with a total rally for August 2022 so far at 49.44%. The volume for the day has been reported at over 638K shares which is the highest single-day volume in over 7 months. 

With today’s rally, the stock has surged past a previous all-time high of INR 537.48, marked in January 2008, while another peak of INR 518.4, marked in September 2016 was also cleared today. As the stock is now trading above this multi-year resistance zone of INR 516 - INR 538, the ongoing rally might continue for some time as there is no overhead supply left. 

It is difficult to spot prominent support zones as the stock has rallied quite sharply from the Covid-19 pandemic lows. However, a retracement to INR 500 might attract some bulls to go long, while a level of INR 440 might interest some conservative investors.   

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    very useful article
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