DCM Shriram Shares Hit 20% Upper Price Band

The stock has surged 84.52% so far this year.

<div class="paragraphs"><p>(Source: DCM Shriram website)</p></div>
(Source: DCM Shriram website)

Shares of DCM Shriram Ltd. hit the upper circuit of 20% on Friday, continuing its rally this year.

The stock was trading 15.23% higher at Rs 1,073 apiece as compared with a 0.47% gain in the benchmark NSE Nifty 50 as of 11:09 a.m. It rose 20% to hit an intraday high of Rs 1,118.50 apiece.

The stock has increased 84.52% year-to-date. The average traded volume so far in the day stood at 22.4 times its monthly average, while the relative strength index was at 85, indicating the stock may be overbought.

Ventura Securities Ltd. initiated coverage with a 'buy' call, citing that it has incurred half of its Rs 3,050 crore planned capex. The brokerage, in a note released on Thursday, cited almost 25% price correction from its peak and reduction in commodities prices as potential triggers.

The bearish trend was bottoming out, said the brokerage, which has a target price of Rs 1,247 for the 24-month period, implying a potential upside of 32%.

Manufacturing PMI Rises To Three-Month High Of 58.6 In August

The brokerage highlighted a capex plan of Rs 3,050 crore, out of which 50% had already been incurred, along with an almost 25% price correction from its peak in line with the reduction in commodities prices, according to a note on Thursday.

It said the bearish trend was bottoming out and it expects the agricultural chemical manufacturer's stock to rise to Rs 1,247 over a 24-month period, implying a potential upside of 32%.

Ventura Securities expects revenue to rise at a compound annual growth rate of 4.4% over FY23–26, driven by:

  • A capacity expansion of 850 tonne per day in caustic soda.

  • New revenue stream addition of approximately Rs 650 crore via value addition to the chloro-vinyl segment through downstream chemicals, such as epichlorohydrin, aluminum chloride and hydrogen peroxide.

  • Increase in sugar capacity to 41,000 tonne of canes per day from the earlier 38,000 TCD and 560 kilolitres per day from the earlier 440 KLPD.

  • Commencement of sulphate of potash production from the second quarter of fiscal 2024.

  • Fenesta Building Systems' revenue to rise at a CAGR of 25% by improvement in existing asset utilisation.