RHI Magnesita Breakout

2022年9月21日

1. Buy or Sell at your own risk
2. Don't risk more than 1%-2% of your capital as stop loss
3. Position Size formula:- Stop Loss Amount/(Buy Price-Initial Stop Loss Price)
4. Sell on RSI close below 30 (or use any other method of your liking)
5. Some other ways to sell stocks can be
a. 25% or 50% up in three weeks or less
b. Weekly tailing tops with high volume
c. Exhaustion gaps
d. Heavy daily volume without further upside
e. Largest one day price drop

After a consolidation since 18th April 2022, RHIM has given a breakout today. Buy with a stop just below ₹608. (One can use the low of the previous bar/supertrend indicator/previous support point/fixed percentage from the buy price as stop loss also)

Strengths: -
1. TTM Sales growth is at 38%, TTM Profit growth is at 78%, quarterly sales growth is at 40% and quarterly profit growth is at 64%

2. 10 year and 5-year average ROE more than 15%

3. Debt to equity at 0.06(less than 1 is good), Interest Coverage at 738(greater than 3 is good), Current Ratio at 2.20(greater than 1.5 is good), FCF to CFO at 56%

4. The company has been maintaining a healthy dividend payout of 19.7%

5. The company has delivered good profit growth of 31.2% CAGR over the last 5 years

6. FIIs have been increasing their stake since December 2021 (from 0.38 to 2.20 in June 2022)

Weaknesses: -
1. Stock is trading at 10.9 times its book value

2. Debtor days is high at 90 days

3. Borrowings increased to 1011 Cr in March 2022 from 789 Cr in March 2021

Disclaimer: I am not SEBI Registered. Do trade or invest at your own risk, I am not responsible for any losses and won't claim anything from your profits either. Take financial advice from your advisors before jumping in.