Top buzzing stock: Lakshmi Machine Works

Is the momentum of Lakshmi Machine Works worth the ride? Let's find out.

Lakshmi Machine Works Limited is engaged in the manufacturing and selling of textile spinning machinery, computer numerical control machine tools, heavy castings, and parts and components for the aerospace industry. It is a midcap company with a market cap of Rs 9,935 crore. The company has provided poor results across all fronts over the last five years. However, strong business practices and management’s belief to turn things around for the company is the key factor that helps attract investors. This is quite evident from the stock performance in recent times.

On a YTD basis, the stock has delivered an exceptional 102.36% returns and three-month performance stands at 19.22%. This clearly shows that the stock is trending strongly on the upside from the short to medium term.

Surprisingly, the majority of the stake is held is being held by the public (about 52.45%) while the promoters hold 31.13%. The FII and DII together hold about 12% of the stake.

After recording an all-time high of 9950 last month, the stock had undergone a correction phase which let the stock test its 100-DMA support at around 8400. The stock made a V-shape recovery from the 100-DMA and rallied about 900 points. An important point to be noted is that the volumes have been steadily increasing during this time which validates the reversal phase. Today, the stock zoomed over 5% crossing above its 20-DMA. The stock now trades above every key moving average is looks bullish for the short to medium term. The RSI has jumped from 37 to 57 indicating that the stock has regained the strength and might continue to momentum. The lagging indicator MACD is about to show a crossover.

The technical parameters show no signs of weakness and rising volume is a cherry on the cake. The stock has the potential to reclaim its all-time high levels in short term and one can think about riding this momentum.