Cup & Handle and the Trendline Breakouts - HUDCO

Technical Analysis:

• Current Price: ₹233.86 (Note: As of the market close on Friday, May 16, 2025, HUDCO closed around ₹234.50 on the NSE).
  
• Stop Loss: A closing basis stop loss at ₹214 provides a good level of risk management.
  
• Targets: Your targets of ₹265 and ₹335 indicate significant potential upside.
  
• Cup & Handle Pattern Breakout: This bullish continuation pattern suggests a likely move higher after a period of consolidation.
  
• Trendline Breakout: Breaking above a significant downtrend line adds further confirmation of a potential shift in momentum to the upside.
  
• Time Frame: A 1 to 3-month timeframe is reasonable for these patterns to play out, assuming the breakouts are sustained.
  

Confirming the Breakouts:

Volume: Ideally, both the Cup & Handle and the trendline breakouts should be accompanied by a noticeable increase in trading volume. This indicates strong buying interest and adds validity to the signals.
Sustainability: The price should hold above the breakout levels in the coming trading sessions. Any significant retracement below these levels could weaken the bullish case.


Potential Upside:

• Target 1 (₹265): Represents an approximate 13.3% upside from the ₹233.86 level (or around 13.0% from the ₹234.50 closing price).
  
• Target 2 (₹335): Represents a more significant potential upside of approximately 43.2% from the ₹233.86 level (or around 42.8% from the ₹234.50 closing price).
  

Quarterly and Yearly Results & EPS Comparison:

Based on the information available up to the latest reported quarter (December 2024) and the previous fiscal year (FY24):

Latest Quarter Result (December 2024): HUDCO reported a strong 18.84% increase in net profit YoY and a 13.38% increase in total income YoY.
Yearly Result (FY2024): HUDCO showed solid growth in both revenue (11.53%) and profit after tax (19.53%) compared to FY23.

EPS Comparison:

Quarterly EPS (December 2024): ₹3.51 (vs. ₹2.95 in Dec 2023).
Yearly EPS (FY2024): While various sources might have slightly different calculations based on adjustments, the yearly EPS for FY24 was around ₹13.22 (based on previous reports). Some sources also indicate a FY24 EPS of ₹10.57. We'll need the official FY25 full-year results for a precise year-on-year comparison. These are expected in the coming weeks.

P/E Comparison:

• Based on the closing price of ₹234.50 and an estimated FY24 EPS of ₹13.22, the current P/E ratio is approximately 17.74.
  
• Comparing this to the industry P/E for Housing Finance (which can fluctuate but is generally in the range of 15-30), HUDCO's P/E seems reasonable and not excessively high. We'll have a clearer picture of the valuation once the FY25 EPS is released.
  

Corporate Action:

Dividend: HUDCO has a history of paying dividends. For FY24, they declared a total dividend of ₹1.50 per share. Investors will be watching for any dividend announcement that typically accompanies the full-year results for FY25.

Key Factors to Monitor:

• Breakout Confirmation: Strong volume on the breakouts is crucial.
  
• Upcoming Q4 & FY25 Results: The financial performance in the latest quarter and the full fiscal year will be a significant driver for the stock price. Look for the announcement dates.
  
• Government Policies: As a government-backed entity involved in housing and urban development, HUDCO's prospects are linked to government policies and spending in these sectors.
  
• Market Sentiment: Overall market sentiment and the performance of the financial services and housing finance sectors will play a role.