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The BSE capital good index post breakout above 13 years range in August 2021 has gained from strength to strength while maintaining higher high-low in all time frame. One of the preferred pick of ICICI Securities within the midcap capital goods space is Elgi Equipments which has shown resilience during the recent market correction and has outperformed. 

The stock has recently registered a resolute breakout above the bullish Flag pattern signals continuation of the up move and offers fresh entry opportunity. As per the domestic brokerage and research firm, Elgi Equipments stock earlier during November has resolved above a falling channel containing last six months breather indicating resumption of primary up trend.

The brokerage's Buy rating on the multibagger stock, that has surged over 125% in a year, comes with a target price of 327 per share with a stop loss of 261.

“We expect the stock to maintain positive bias and head higher towards 327 levels in coming months as it is the measuring implication of the flag breakout which also coincides with the price parity of the previous major up move ( 102-243) as projected from the major trough of 192 projecting upside towards 327," ICICI Securities' note stated.

Elgi Equipments manufactures a wide range of air compressors and automotive equipment, It is the second largest player in Indian air compressor market (around 22% market share) and is among the top eight players globally. Expansion in new international markets is expected to drive long term incremental growth.

“Going forward, accelerated growth in International markets, new products like disrupted AB series compressors, good traction in India business to drive long term incremental growth," the brokerage note added.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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