Kalyani Steel Share: RSI Below 30, Price on Support - Ideal Buying Opportunity?

Kalyani Steels Ltd, a leading iron and steel manufacturer, has caught the attention of investors, thanks to its recent price action and technical indicators. But is this the right time to jump in? Let's delve into the technical signals, quarterly results, and future plans to understand if Kalyani Steels deserves a spot in your portfolio.

Technical Analysis: A Tale of Two Stories

The daily chart of Kalyani Steel stock paints a promising picture.

Since the end of July 2023, the stock has been on a remarkable uptrend, breaking previous resistance points and signaling a breakout. Notably, the Relative Strength Index (RSI) is currently below 30, indicating potential oversold conditions. The stock's price is positioned at a crucial support level, reminiscent of the point from which it surged in the past. Investors are advised to closely monitor whether the price consolidates at this level or breaks through for a retracement, offering potential buying or shorting opportunities, respectively.

Quarterly Results Overview

Examining the quarterly results of Kalyani Steels provides additional insights. In September 2023, the company recorded a 4.05% dip in net sales, totaling Rs 480.07 crore compared to Rs. 500.33 crore in September 2022. Despite this decrease, the quarterly net profit saw a substantial increase of 68.47%, reaching Rs. 58.32 crore from Rs. 34.62 crore in the same period last year. The EBITDA also witnessed a significant uptick, standing at Rs. 102.16 crore in September 2023, reflecting a 60% increase from Rs. 63.85 crore in September 2022. The earnings per share (EPS) rose from Rs. 7.93 in September 2022 to Rs. 13.36 in September 2023. This positive earnings trend suggests resilience in the face of sales challenges.

Strategic Expansion Plans

Kalyani Steels has ambitious plans for expansion, with a 200,000 TPA Non-recovery/Heat recovery coke oven and a 17 MW captive power plant in the pipeline. The estimated budget for this venture is around ~276 crores, slated to be funded through a combination of debt and internal accruals. The company aims to commission this project during FY23. Additionally, there are plans for a greenfield expansion with an investment of $0.5 billion in the near future, showcasing a commitment to sustained growth.

Focused Approach

Kalyani Steels continues to focus on approvals and new product development, particularly with major Original Equipment Manufacturers (OEMs) in both domestic and international markets. By concentrating on niche segments such as critical components in the automotive and engineering sectors, the company aims to insulate its product range from the volatility of global market fluctuations.

For those eyeing opportunities in the steel industry, the noteworthy growth of Kalyani Steel and the ensuing impactful factors make it a compelling option. However, it's crucial to conduct thorough research and evaluate your financial goals before making any investment commitments.

Disclaimer: (This information is provided solely for informational purposes. It is important to note that investing in the market or a business idea involves market risks. Before investing money as an investor/ owner/ partner, always consult an expert. DNP News Network Private Limited never advises to invest money on stocks or any specific business idea. We will not be liable for any financial losses.)

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