ELECTROSTEEL CASTING  manufactures cast iron spun pipes which are used for water supply as well as in sewerage. The company also produces sponge iron, part of which is used in-house and the rest is sold in the open market. It has metallurgical coke production capacity of 2,80,000 TPA. It further produces ferro alloy which is an important input for steel production and also is in the process of adding to its ferro alloy capacity. Moreover, the company produces foundry grade pig iron which meets the needs of the automobile industry. ECL is in the process of expanding its DI pipes capacity from existing 7 lac to 9 lac ton per annum which is likely to be operative soon. ECL has EPS of Rs. 4.25 in the third quarter(2023-24). These factors indicate a possible scope for appreciation in the share price.

On the technical front, the chart of the Electrosteel Castings Ltd looks promising, especially if one looks at its trajectory over the last one year on a daily time frame. Having risen by more than 400% since March 2023, the stock has started correcting recently. The stock has come down by almost 32% since reaching its lifetime high of INR 204.30 on 7th February 2024. 

The Relative Strength Index (RSI) currently indicates the stock to be trading at a Neutral Zone and has just made a golden crossover pointing towards a possible positive uptrend in the short to medium term. Although the volume growth does not look promising since its jump between 14th-15th March 2024, one can wait and take a fresh entry at 166.07 for targets of 183.30 and 200.60 with a strict stop-loss at 138.45. However, for investors who are already into the stock, accumulations can be made at 145 and 165 levels depending on whether it breaks the support for a downside or uses it for a positive reversal.

LEVELS TO WATCH