Shares of Borosil Renewables jumped more than 6% in intraday trade on BSE in an otherwise weak market. This is after the Union Cabinet on Wednesday approved changes in the production-linked incentive (PLI) scheme and approved the second tranche of solar power PV modules.
₹19,500 crore is allocated for the second tranche of the Solar PV modules that aims to increase the production of low-cost solar energy, CNBC-TV18 reported.
The stock has been on a winning streak since last year as in the last one year, it has jumped 89% while the equity benchmark Sensex has remained flat.
Borosil Renewables is engaged in the manufacturing of patterned glass and low iron solar glass for application in photovoltaic (PV) panels, flat plate collectors and greenhouses.
It offers various product range of solar glasses, which includes antimony-free solar glass, anti-reflective and anti-soiling coated solar glass and anti-reflective and shipments in reusable/returnable packaging to cut down the need for wood.
For the June quarter of FY23, the company reported a standalone total income of ₹173.1 crore against ₹142.5 crore in the same quarter last year. Profit for Q1FY23 stood at ₹30.10 crore, down 24% against ₹39.62 crore in the corresponding quarter last year.
Borosil Renewable’s Q1FY23 PAT declined as the cost of raw materials, fuel and power expenses remained elevated in the quarter.
Brokerage firm HDFC Securities maintained an 'add' rating on the stock after its June quarter numbers, with a target price of ₹704, based on FY25E 23 times P/E.
"Though it would be tough for Borosil Renewables to sustain its profitability amidst a steep rise in input costs, we do not foresee much risk to the realisation for solar glass, given: (1) limited domestic availability of solar glass; (2) the company has existing contracts for soda ash and natural gas until Dec 2022 at prices that are favourable compared to current prices; (3) SG-3 is expected to commission in Oct 2022 and company plans to use furnace oil instead of natural gas in SG-3 for the time being; (4) anti-dumping duty on the module that came into force in April 2022 will ramp up domestic manufacturing of solar modules," said HDFC Securities.
Technical indicators favour the stock and analysts advise buying the stock at the current juncture.
Jigar S. Patel, Sr. Manager - Equity Research, Anand Rathi Share and Stock Brokers pointed out that the stock has corrected almost 37% from its peak of ₹833 which was registered on April 25, 2022.
On the daily scale, it has formed a bullish engulfing pattern along with healthy volume which is a sign of early reversal.
"At ₹570-580, it has made a nice base along with range breakout with heavy volume which further confirms its upside. Recently on the daily scale, the stock confirmed a MACD bullish cross near zero line along with Daily RSI bouncing back from 45 levels, confirming its bullish bias (refer to the chart below). Thus we advise traders to buy the stock for an upside target of ₹700 with a stop loss of ₹560," said Patel.
Disclaimer: The views and recommendations given in this article are those of individual analysts and broking firms. These do not represent the views of MintGenie.