Stock Mantra: This debt-free paint company may touch a new 52-week high, what’s in your portfolio

Market experts say that there is an inverse correlation between paint stocks and crude oil prices. Along with other technical factors, this is also a factor that can take the share price of Kansai Nerolac towards the level of Rs 705.

So far in 2021, Kansai Nerolac has underperformed Nifty. It looks like this stock can touch its 52 week high and cross 700 level in next 2-3 months.

With a market cap of Rs 33,000 crore, the stock has gained more than 2 per cent so far in 2021. At the same time, the Nifty has gained 13 percent and the S&P BSE 200 Index has gained 16 percent in the same period.

On January 21, the stock touched a 52-week high of Rs 679.60. It had touched a low of Rs 522 in March before rising again. The recent breakout from the higher base formation is a sign of another rally which can take the stock towards Rs 700 in 2-3 months.

According to a report by ICICIdirect, Mumbai-based Kansai Nerolac is the second largest coating company in India as well as the market leader in industrial coatings. Kansai enjoys strong support from its parent company in bringing cutting edge technology solutions. The company has huge amount of liquidity. Also the company is debt free. Its net cash position is Rs 650 crore.

Osaka-based Kansai Paint Co is its parent company, Kansai Paint. The parentage of the company is quite strong and reputed. The financial position of the company is strong enough to handle any near term problem with ease.

Dharmesh Shah of ICICIdirect says that the performance of the paint sector in the year 2021 has been good but the performance of Kansai Nerolac has been comparatively weak. The current breakout from the 5-month base formation between Rs 610-520 indicates that the stock is now in an uptrend. We can see a rally in this stock in the coming months and it can easily touch the level of Rs 705 in the next few months.

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