Insecticides (LONG Term Strategy)

18 oct 2020

Hi Everyone,

Here is an interesting update on insecticides India Limited, As you can see the technical side of the Chart is looking very strong. Please see below key points noted on the chart:

1. It formed 2 patterns, the first one Flag and the second one is Pennant
2. There was a huge volume and accumulation for both the Flag and Pennat formations
3. Post the Flag and Pennat formation, there has been a squeeze in the price momentum which is normal for both the patterns
4. Currently, pennant formation looks promising for an upside bullish move in the Long Term. But Having US elections, we need to have a plan irrespective of its technicals/fundamentals shares may fall any low.

Fundamental outlook:

1. PE ratio is 13 for a pesticide company is pretty high compared to peers
2. Their revenues are mainly mixed of the government subsidy, the government has to keep supporting the agrochemical industries to generate such profits
3. Price to book ratio looks decent at 1.35

Combination of Fundamentals with Technicals:

1. Strong On balance volume combined with continuous Flag and Pennant formations looks like a very interesting technical set up
2. VWAP price is at 440 which is also good.
3. Fundamentals are decent, Government will only target the IT/Telecom/Others companies rather than the Agro companies. So, we can assume it is a safe sector in terms of Government intervention

Strategy for Investors:

1. Look out for a break above 501 for a confirmed upmove along with volume
2. Buy the dips is the best strategy for Insecticides with a target of 600 - 650 in 6 months time frame.
3. Please do look out for the volatility during the US elections result, this will be a good time to buy this share at low prices

This is an educational view not a financial advice, please do let me know if you are enjoying these analysis in the comments and Please follow me for more updates.

Thanks! :)