Valiant Organics – Will the Bulls Get One Over On The Bears?

  • Stock Market Analysis
  • Editors Pick

Valiant Organics Ltd (BO: VALN ) is an equity that I have tweeted about many times. This is as I believe the stock has the potential of being an exceptional wealth compounder. In fact, I expect this stock’s future price performance to be somewhat similar to that of IndiaMART InterMESH Ltd (BO: INMR ). I say this as when I had written about Indiamart on it was trading at Rs 2,500 and now it trades at Rs 8,800. Moreover, this price rise occurred in roughly a year.

Valiant’s Fundamentals:

Whilst peeking at Valiant Organic’s fundamentals, the firm seems to be doing well across the board. This is as the ROE came in at 23% which is well above the industry average of 16%. Furthermore, the firm’s management appears to have their affairs organized well as they have been actively reinvesting in the business. This, in turn, has propped up the annual revenue growth rate to 9%. If the company continues to improve its metrics in this manner, then things seem to be on the up and up for the equity.

Another reason why fundamentalists ought to love Valiant is due to the way the firm conducts its affairs. I say this as the administration has embraced an approach in which they search for niche pockets of opportunities within the chemical space where the growth likelihood is immense, whilst the competition is on the lighter side. In turn, this has helped the firm claw into business lines that have way higher operating margins.

Past Technical Outlook:

Most people who have read my past articles know I place way more importance on technicals and quants than on fundamentals. This is as there are plenty of fundamentally sound firms which are pure duds in terms of price performance, an example being ITC (NS: ITC ), which I have covered earlier. This is as until the technicals get into motion, the fundamentals are as useful as toilet paper to an active investor.

The first time I tweeted about Valiant was on 30th March 2021, as my quant levels indicated a strong probability of a price reversal. This is as the stock had been in steep decline post IPO and I believed the trigger-happy traders had now exited.
Tweet Screenshot

The reversal occurred in the next trading session and the equity has thus far netted a return of 40% since then. This is as it was trading at Rs 1,145 and presently trades at Rs 1,608. Now the question is where can the stock go next?
Valiant Organics Daily Chart

The equity on the daily chart is presently in a resistance range that is between Rs. 1,625 and Rs. 1,670. If it does get rejected at this zone, then the support range to watch for a rebound to the upside is between Rs 1,450 and Rs 1,500. If it breaks the present resistance zone, then the next daily chart hurdle is at Rs. 1,830. These levels apply to short-term swing traders.

However, for those who are playing the longer-term game with Valiant Organics as I am. The quant resistance level to watch is at Rs 2,048. Once it crosses that, the next quant resistance is at Rs 2,230 and Rs 2,550.

In conclusion, the equity on the daily chart may be at a temporary crossroad owing to the resistance range. However, whichever way we look at it, the equity has great long-term potential. Lastly, as the equity breaks each of my quant levels, I will either pen another article on Valiant or tweet what my opinion is on the stock at that point.

Disclaimer: The investments discussed by Sandeep Singh Ahluwalia may not be suitable for all investors. Thus, you must trust your analysis and judgment before making investment decisions. The report provided is for informational purposes only and should not be interpreted as a proposition to buy or sell any securities.

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  • The Indian @The Indian
    What about the Corporate governance issues?
    Like 0
  • Hareesh Padigar @Hareesh Padigar
    Like 0
  • Alok Sharma @Alok Sharma
    Like 0

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