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Traders looking for mean reversion opportunities should have a look at the share of TV18 Broadcast Limited (NS:) which is a well-known TV broadcast network, having a market capitalization of INR 5,520 crores. It owns brands such as CNBC-TV18, CNBC Awaaz, News18 India etc. From the valuation perspective, it is trading at around half the valuation of its rival New Delhi Television Limited (NS:)) with the former’s P/E ratio at 9.44, compared to the latter’s 18.38.
The company has grown its net income at a mind-boggling 5-year CAGR of INR 146.6%, from a mere INR 6.4 crores in FY17 to INR 584.5 crores in FY22 which is the highest ever. While in the same period, its market share has risen from 7.3% to 27.8%. Mutual funds have increased their stake from 0.12% in the December 2021 quarter to 1.58% in the December 2022 quarter, which is a multifold jump.
Image description: Daily chart of TV18 Broadcast with the RSI at the bottom
Image Source: Investing.com
Now coming to the chart structure, the stock is currently rising from the oversold zone. The RSI (daily, 14) showed a reading of 25.8 on 27 January 2023 when the stock marked a low of INR 31.75. After a new low of INR 31.65 in the next few days, the stock formed a bullish divergence on the daily chart which is a good indication of an impending reversal.
Today, the share price of TV18 Broadcast rose 5.59% to INR 34 and closed at the highest level since 25 January 2023. This noticeable jump in the share price was also backed by volume expansion. The NSE recorded a total volume of 11.75 million shares which is 148% higher than the 10-day average volume of 4.72 million shares. This is the highest one-day volume since mid-December 2022 and this increasing demand has clearly been seen today.
Now as the stock is preparing to rally from here, the nearest target to which it could rise is around INR 38, giving it an upside potential of 11.5%. The 52-week low of INR 31.65 is the level below which long positions should be squared off to get protected from a further slide.
Read More: Stock Under Rs 40: Reversing From Bottom, Surges 5%!
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