Small-cap stock below ₹100 on cusp of breakout; Should you buy?

Small cap stock under ₹100: BCL Industries witnessed strong propulsion today after the release of an order book update on Wednesday, November 27, fueling the stock to gain nearly 4 per cent.

BCL Industries disclosed that the company had received the acceptance letter on November 26 for a tender offer floated by Rajasthan State Ganganagar Sugar Mills Ltd asking to supply 60 lakh litres of Extra Neutral Alcohol (ENA) in six months, as per the BSE filing on Wednesday. 

As per the contract offer, BCL has to supply 60 litres of ENA from its distillery in Bhatinda, Punjab, over six months, with the buyer having an exercisable option of asking for an additional 50 per cent supply. 

BCL Industries Ltd shares closed 3.21 per cent higher at ₹55.70 after Wednesday's trading session, compared to ₹53.97 at the previous market close. The company filed the order book development with the stock exchanges during market operating hours.

BCL Industries share price target

“The stock is looking positive on the technical chart and on the cusp of giving a fresh breakout at ₹58 to ₹59. On breaking above this, the small-cap stock may touch ₹69 and ₹85 in the medium to long term,” said Mahesh M Ojha, AVP - Of research at Hensex Securities.  

“Short-term investors can hold the stock for ₹69 target and fresh investors can also buy the stock keeping stop loss below ₹51.50,” said Ojha.

BCL Industries' Q2FY25 results

BCL Industries announced a 52 per cent rise in net profits to ₹29.86 crore for the July to September quarter of the financial year 2024-25, compared to ₹19.66 crore in the same quarter the previous year, as per the consolidated financial statements.

“BCL Industries has delivered positive Q2FY25 results. Company's EPS and sales have registered a decent growth that has worked as trend reversal for the small-cap stock. Today's rally in the stock is because of the fresh alcohol supply order. So the stock is expected to continue attracting fresh buying in short to medium term,” said Anshul Jain, Head of Research at Lakshmishree Investment and Securities. 

On the revenue front, the company's revenue from its core operations rose 55 per cent in the second quarter to ₹746.12 crore, compared to ₹480.70 crore in the same period the previous year. BCL Industries' core businesses, Oil and Vanaspati and Distilling, shined in the July to September quarter results. 

According to the exchange filing on Wednesday, the company also disclosed that it is set to fulfil approximately 80 lakh litres of the ENA order to Rajasthan State Ganganagar Sugar Mills Ltd by November 30. According to the BSE filing, the company received the order on February 2, 2024.

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