Britannia stock ready for a rebound: Analysts | Economic Times

Mumbai: The recent underperformance of Britannia Industries’ shares may have set the stage for a rebound, said analysts. The stock, which has shed 2 per cent in a bull market in the past six months, could rebound by as much as 12 per cent in the near term driven by technical strength and lower valuations compared to its peers.The stock, which has been trading in a range for the last six months, recently crossed its 200-day moving average (DMA) of Rs 3,485. On Wednesday, it ended 0.5 per cent down at Rs 3,540. When a stock crosses its 200-DMA, it is said to be in a bull trend.“The stock is in a bullish zone on long-term chart and one should use dips as a buying opportunity near supports,” said Rajesh Palviya, head technical & derivatives research, Axis Securities. “On the near-term charts, the stock is in oversold territory and we can see pullback action in the near term.”Palviya said once the stock manages to cross Rs 3,600-3,630, it could resume its uptrend and move towards Rs 3,800-3,950 levels.Sandeep Porwal, technical analyst at Ashika Stock Broking, said the formation of ‘spinning top candlestick’—a sign of bullish reversal-- near the key average indicates early signs of bottoming out.Analysts are optimistic about the company’s plan to transform from a biscuit maker to a food company. The stock is trading below its five-year average valuations, they said.Britannia shares hit a 52-week high of Rs 4,015 on July 21 after surging almost 88 per cent from the lows on March 23. Since then, the stock has drifted lower after analysts raised concerns over its inter-corporate deposits (ICD) in associate companies accounting for 25 per cent of its total investment. Intra-group ICDs stood at Rs 700 crore as on September 30, 2020 against Rs 600 as on March 31, 2020.