MMTC Ltd (known fully as Metals and Minerals Trading Corporation of India), a state-owned trading company, has seen its share price soar by 50% in the last three trading sessions, hitting a 52-week high of Rs 63 on Tuesday. The stock has more than doubled in the last six months, making it a multibagger. However, the company has not reported any significant news or event that could explain the sudden surge in its share price and volume.
MMTC’s Response to Stock Exchanges
On Tuesday, the stock exchanges asked MMTC to clarify the reason behind the sharp increase in its share price and volume, as per the regulatory norms. In its reply, MMTC said that it regularly informs the exchanges about any material event or news that may affect its stock price. It also said that there was no such event or news in its knowledge that needed to be reported to the exchanges or that could have an impact on its share price or volume.
Fundamental Analysis of MMTC’s Stock
The fundamental analysis of MMTC’s stock shows that it has a low price-to-earnings (P/E) ratio of 7.31 and a high price-to-book (P/B) value of 6.22. The stock also has a high beta of 1.21, indicating high volatility. The stock is trading above all its short-term and long-term moving averages (SMAs). The stock’s 14-day relative strength index (RSI) is at 87.22, indicating overbought conditions.
The company’s financial performance has been mixed in the recent quarters. In the quarter ended December 2020, it reported a net profit of Rs 18 crore, compared to a net loss of Rs 10 crore in the same quarter last year.
However, its revenue declined by 32% year-on-year to Rs 1,016 crore. In the quarter ended September 2020, it reported a net profit of Rs 8 crore, compared to a net loss of Rs 19 crore in the same quarter last year. However, its revenue declined by 47% year-on-year to Rs 1,072 crore.
The company is engaged in various businesses such as international trading, domestic trading, agro business, precious metals business and coal business. It also holds stakes in various joint ventures and subsidiaries such as Neelachal Ispat Nigam Ltd (NINL), Indian Commodity Exchange Ltd (ICEX), Metals and Minerals Trading Corporation of India Ltd (MMTC-PAMP), etc.
Technical Analysis of MMTC’s Stock
The technical analysts have mix views on MMTC’s stock performance and outlook. Some of them suggest booking profits at the current levels, while others believe that the stock has more room to grow. Some of them also point out that the stock faces a strong resistance level on the weekly chart, which needs to be breached for further upside potential.
Book Profits at Current Levels
AR Ramachandran from Tips2trades said that MMTC’s stock is bullish but also very overbought on the daily charts, with the next resistance at Rs 68.3. He advised investors to book profits at the current levels, as a close below the support of Rs 60 could lead to a target of Rs 44 in the near term.
Expect More Upside
Market expert Ravi Singh said that MMTC’s stock is looking strong on technical terms and momentum indicators are suggesting a strong uptrend in the counter. He said that this trend is likely to continue in the coming weeks and that the stock may touch Rs 70 level in the near future.
Watch Out for Weekly Resistance
Kush Ghodasara, independent market expert, CMT, said that MMTC’s stock has recently broken out from a consolidation pattern on the daily chart with substantial trading volumes. However, he said that a major challenge lies on the weekly chart, where a steadfast resistance at Rs 63 has held since 2014. He said that while momentum indicators are favorable, confirmation depends on a weekly close above Rs 63. He suggested avoiding new positions and maintaining existing ones with a trailing stop-loss at Rs 60.80.
Conclusion
MMTC’s share price has witnessed a remarkable rally in the last few days without any apparent reason or trigger. The technical analysts have divergent views on its future prospects and suggest different strategies for investors and traders. The fundamental analysis shows that the company has a low valuation but also faces challenges in its revenue growth and business diversification. The investors should exercise caution and do their own research before investing in this stock.
Disclaimer:
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