Stock Under Rs 100: Hits 10% Upper Circuit, Shows 23% Upside!

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By mid-day, the broader markets have turned positive, after opening on a flat note. The Nifty 50 index is up 0.38% to 17,464 by 11:25 AM IST with 7 out of the 11 sectoral indices trading in the green zone. 

Coming to the outperformers for the day so far is a small-cap company that is luring investors is BPL Ltd (NS: BPL ). It is a consumer electronics company with a market capitalization of less than INR 400 crores. It manufactures CFL and LED lighting, consumer electronics, single-sided printed circuit boards (PCBs), etc.

The company has proven to be a turnaround story in FY22 by reporting a consolidated net income of INR 12.95 crores, compared to a loss of INR 21.46 crores a year ago. In fact, it reported the highest profit since FY17, taking its EPS to INR 3.37. The PE Ratio of 25.59 might seem decently valued for a small cap, but looking at the sector’s average of 134.25, the company is available at a lucrative valuation, especially considering its FY22 earnings jump. Also, the promotors hold around 63.2% stake in the company and none of the shares are pledged. Investors’ confidence improves after seeing 0.5% DIIs holdings out of which 0.29% is with insurance firms. 

Image Description: Daily chart of BPL with volume bars at the bottom

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Coming to the main attraction, the share price of BPL hit a 10% upper circuit in today’s session to the last traded price of INR 74.55. This is the highest price level the stock has been able to hit in over three months. In the midst of the rally, BPL shares also breached their nearest resistance of INR 72.9, which amplifies the bullish trend of the stock. The volume for the day so far has been recorded at around 259K shares, which is a massive 439% jump over the 10-day average volume of around 48K shares (recorded yesterday).

The price and volume surge in today's session depicts that investors are fleeing to buy BPL shares as risk appetite soars amid positive broader market sentiments. Another reason for this buying frenzy is the high expectations of the upcoming Q1 FY23 earnings, the tentative date of which is 11 August 2022.

On the daily chart, the stock is looking all set to reach higher levels. The next hurdle for the stock is around INR 82 which might come on the screen sooner than expected, considering the current demand for BPL shares. Above this resistance, there is virtually no hurdle till the year’s high of INR 91.8.

The nearest support for the stock is the recent trough of INR 65.05, below which the validity of the current rally would be negated.  

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