Timken India rallies 30% in a week, nearly doubles wealth in a year: What should investors do?

Shares of Timken India which rose nearly 30 per cent during the week ended June 3, have nearly doubled investors' wealth in the last year, data from exchanges showed.

Timken India rallied from Rs 1,322 recorded on 3 June 2021 to close at Rs 2,516 on 3 June 2022 which translates into an upside of over 90 per cent in a year. For the week ended June 3, 2022, the stock price rose 30 per cent from Rs 1,964 recorded on 27 May 2022.

Timken India, a Timken Company subsidiary, started manufacturing bearings in India nearly three decades ago, the company website showed.

The company, incorporated in the year 1996, is a midcap company (having a market cap of over Rs 18,000 crore as on 3 June 2022) operating in the engineering sector.

The stock hit a fresh 52-week high of Rs 2,727 on June 1 following strong March quarter results but saw some profit-taking in Friday’s session. The stock closed 3.2 per cent lower at Rs 2,516 on the BSE.

The company's net profit surged 128.87 per cent YoY to Rs 121.30 crore which is one of the highest in the industry, Trendlyne data showed. The company reported over 40 per cent YoY rise in net sales to Rs 667.40 crore in March 2022 quarter.

“The stock reacted to its Q4 earnings numbers, and it took out all its recent resistance levels to enter into blue sky territory,” Rahul Sharma, Director & Head - Research, JM Financial Services, said.

“Volume expansion was huge as it broke out above Rs 2,300. It remains a buy-on dip counter as long as it trades above this breakout zone,” he added.

What should investors do?
Technical experts advise investors to stay out and wait for a target closer to Rs 2,700-2,800 levels in the short to medium-term.

In the short term, we could see some consolidation, but it is a good 'buy on dips' stock where support is firmly placed near Rs 2,300 levels.

“The excessive rally seen in Timken during the week went by on the back of extraordinary results. The price action is extremely positive but the reaction was too quick,” Mehul Kothari – AVP – Technical Research, Anand Rathi Shares & Stock Brokers, said.

“We feel that there is a possibility of some cool off or consolidation in the coming week. Then the stock might be prepared for further upside. For the time being, Rs 2,750 might be an immediate hurdle while on the downside, support is at Rs 2,300,” he added.

Technically, Timken India had corrected from the March high of Rs 2,305 and the correction continued till mid-May.

“Post the decline, the stock formed a base near the junction of the 40-week exponential moving average & the weekly lower Bollinger Band,” Gaurav Ratnaparkhi – Head of Technical Research at Sharekhan by BNP Paribas, said.

“Thereon, the stock resumed the larger uptrend. The rally in the last week was accompanied by volumes as well. Thus, the stock is expected to stay on an upward trajectory and can head towards Rs 2,800. The short-term support is placed at Rs 2,400,” he added.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)