Small Cap Idea for Short Term:Pritika Auto Industries

  


We are starting a New Series where we will discuss Mid/Small Caps stocks based on Both Fundamentals and Technical for Short and Long term Investment. Last time we have covered MSTC  Mazagon Dock G G Engineering Ltd.  This week we will Analysis Pritika Auto Industries

Company Background:

Pritika started in 1974 by Mr. R.S. Nibber, a young technocrat, manufacturing small forgings is today a renowned organisation in Tractor & Automotive industry providing excellence in field of precision machined components out of casting, forging & bar stock. Pritika Auto Ltd. has nearly five decades of experience in Tractor/Auto component manufacturing. Currently, they have three plants wherein two are located in Punjab and one in Himachal Pradesh with a total production capacity of over 50,000 tons per annum.

To cater to the rising demand, the Company plans to expand capacity by 1,500 tons per month, resulting in a capacity of 18,000 pa, through a new manufacturing unit in Punjab – operational from 2023. Thus, we will have a total capacity of 68,000 ton pa by 2023. They have a strong pan India presence and also export to major client in the US. With regards to products, they have a diversified portfolio which includes axle housings, wheel housings, hydraulic lift housings, end cover, plate differential carrier, cylinder blocks, crank cases.The company has announced highest Monthly sale ever and highest yearly sale on consolidated basis. They are now the no. 1 company in North India for machined castings.

The company’s clientele includes OEMs like M&M, Swaraj, TAFE, Escorts, SML Isuzu, TMTL, Ashok Leyland, New Holland Tractors India Ltd., Brakes India Ltd.

Pritika Auto Industries is listed on BSE with TICKER PRITIKAUTO | 539359 |

As there is a strong outlook in agriculture Scetor, backed by a healthy monsoon, is driving demand for tractors. Tractor industry is expected to grow at CAGR of 8-10% during 2017-22 wherein unit sales are expected to reach one million by mid of next decade, registering a 6-7% CAGR.

Buoyant agriculture industry is complemented by supportive government initiatives for the agriculture and rural sectors, as well as for the automotive sector. Point worth highlighting here is the government’s Automotive Mission Plan (AMP) 2016-26 which will benefit the industry in the multiple ways. This will lead to an increase in contribution of auto industry in the country’s GDP to over 12%. In addition, End of Life Policy would be implemented for old vehicles that will open up new opportunities. This will be big positive for Pritika Auto.

Technicals

Daily Chart 

On Friday Pritika has closed above its 200 DMA suggesting long term trend is turning bullish, We need another Weekly close for confirmation. Also at 21 we have trend line resistance looking at volumes in past few trading sessions seems we will break the resistance this time.Also we are approching 144 days time cycle in coming week so price momemtum can incresae in coming week.

Weekly Chart

On Weekly chart we are back above the falling trendline suggesting price is heading towards 52 Week high of Rs 55.

Traders can go Long in range of 19-19.5 with SL of 17.2 for a target of 21/22.5/25 

Please also do your own study before trading this stock and trade in small quantity also be strict with Stoploss.



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