What pushed Himalayan Distillery’s share price up by 20% in two trading days?

Wed, May 16, 2018 10:03 AM on Company Analysis, Exclusive, Featured, Financial Analysis, Stock Market, Technical Analysis,
What pushe...

The largest liquor company of Nepal, Himalayan Distillery Limited (HDL)’s share price has increased by around 20% in last two trading days to Rs 1,337.  

Technically, Thursday’s candlestick pattern was a Dozi, indicating indecisiveness in both buyers and sellers but as the trend was downward, all the sellers who were exiting the trade had started holding now, which encouraged aggressive buyers to take the position and soared the price up by 9.95% on Monday.

Monday’s candlestick pattern was bullish marubozu, showing over enthusiasm of buyers. All those optimistic buyers entered the market yesterday, which raised the stock price insanely and broke upper circuit price limit despite the fall of NEPSE index. Yesterday’s candlestick was also bullish marubozu which means buyers are still dominating the game.

Apart from candlestick analysis, Moving Average of all periods is below market price, indicating strong uptrend, also supported by both MACD and RSI indicators. There is a resistance at Rs 1,340 but if it opens breaking this level, there is no major stoppage for the stock today. The next major resistance level for the stock is at Rs 1,490.

Volume is not looking good as the number is very low but has increased by 9 times on Monday and is up by 10 points yesterday to 210, showing growing interest of investors. Thursday's closing price (May 10, 2018) was recorded at Rs 1,106 and on Monday, stock opened at Rs 1,128, by breaking the 180-Days Moving average resistance of Rs 1,106.24 and without any single major correction, price moved up by around 20% in two days to Rs 1,337.

The recently published 3rd quarterly statement of FY 2074/75 is also fueling the price as the figures on the result are looking great.

Financial indicators

Q3 2074/2075

Q3 of 2073/2074

Change

Reserve & surplus

38.76 Cr

37.77 Cr

2.62%

Net Profit

19.32 Cr

6.93 Cr

178.78%

Revenue from sales

161 Cr

95.05Cr

69.38%

Net worth per share

179.47

176.9

1.45%

Net asset per share

248.15

245.79

0.96%


There is no increment in equity share capital but the revenue from sales and net profit has increased by 69% and 178% respectively, which shows that the company is generating much more profit from the same amount of shareholder’s fund; company’s health is looking financially sound from this data.

HDL's current paid-up capital is Rs 38.56 Crore, annualized Earnings per Share is Rs 66.82 and annualized P/E ratio is 20 times. From these figures, stock is looking relatively cheaper than other Manufacturing & Processing sector scrips, which attracted the investors in hopes of higher dividend this year. HDL had distributed 21.05% cash dividend to its shareholders from the profits it earned in FY 2073/74.

Today, HDL had opened with 2% gap up and had reached upper 10% circuit level at Rs 1,470. Currently, it is being traded at around Rs 1,400.