Banking stock below Rs 50 breaking out: Single-digit PE stock breakouts - don't miss the action!
The banking stocks appeared promising at the outset of 2024, demonstrating the potential for an improvement in earnings trajectory. In addition to fundamental reasons, the banking sector is anticipated to be a major beneficiary of an inflow of money from Foreign Portfolio Investors (FPI) in the Indian stock market.
On a day when Indian benchmark indices reached fresh all-time highs, the Bank Nifty exhibited relative underperformance compared to the frontline gauge, with Nifty 50 trading up by 1.15 per cent. However, one banking stock that has captured the limelight is Dhanlaxmi Bank Ltd.
The stock of Dhanlaxmi Bank Ltd is trading higher by 17 per cent and has recorded the highest single-day trading volume since September 18, 2023. With this robust move, the stock has registered a resolute breakout of almost a 4-month stage-2 consolidation, signaling the resumption of an upward trend and presenting a fresh entry opportunity. The depth of the consolidation is about 23 per cent, and the stock is trading above all the short and long-term moving averages, which are trending upward in a desired sequence.
The daily Moving Average Convergence Divergence (MACD) is pointing northward while sustaining above its nine-period average, thereby validating a positive bias in the stock. Simultaneously, the daily 14-period Relative Strength Index (RSI) has generated a buy signal, moving above its nine-period average, further confirming the positive bias.
Established in 1927, Dhanlaxmi Bank Ltd. (DBL) is a Kerala-based small-sized private sector bank headquartered in Thrissur. As of September 30, 2023, the bank has a presence across 14 states and one Union Territory through 255 branches, 275 ATMs, and 17 Business Correspondents (BCs) with an employee base of 1,718. The bank's shares are listed on BSE and NSE and are widely held. DBL has no identifiable promoter, and the shareholding pattern is well-diversified, with the major holding by resident individuals at 51.63% as of September 30, 2023.
The stock is a low Price-to-Earnings (PE) stock, trading at a PE of 7.86, which is below the industry PE of 14.4x. Additionally, the stock is trading below its book value of Rs 38. The stock has delivered nearly 54 per cent in the last one year.
Disclaimer: The article is for informational purposes only and not investment advice.
DSIJ offers a service 'Technical Advisory Services' with recommendations for best swing trading stocks based on research and analysis to help subscribers make healthy profits. If this interests you, then do download the service details pdf here