Key technical observations
The stock entered a secondary corrective phase after hitting a high of | 392 in July 2014. The entire corrective price action over the past seven months took the pictorial form of a well defined Cup & Handle pattern as highlighted in the adjoining chart. A Cup & Handle formation is a bullish continuation price pattern having positive implication on the price front upon resolution above the neckline of the pattern
At the CMP, the stock is trading at 14.3x FY17 PE, 1.3x FY17 P/BV & 6.5x FY17 EV/EBITDA. Considering its strong well diversified order book and relatively better quality of management & execution capabilities ensuring 36.0% CAGR in earning during FY14-FY17E, we believe SIL’s current valuation is very attractive.