IIFL recommends to buy Neyveli Lignite at Rs 140

Bangalore: With the stock being very active in the past few days, India Infoline (IIFL), a brokerage firm has recommended to buy the shares of Neyveli Lignite Corporation (NEYVELILIG) at a target price of Rs 140. According to IIFL, the stock has broken out from a symmetrical triangle pattern. The stock had been moving back and forth within the context of the triangle from third week of June 2009. In the above formation, it has converging trend lines that come together at an apex. It is considered a bullish set up. The one year stock price chart is on the left.

Neyveli Lignite is an open-cast mechanized lignite mine. The company mines 24 million tons of lignite annually and generates power with installed capacity of 2490 megawatts of power. The Company has 50 percent joint venture with Tamil Nadu Electricity Board. Recently, the company announced its plans to invest about $8.2 billion on power generation and mining capacity augmentation by 2017. The plan also includes development of power projects using other fuel feed. Of the proposed investment, $2.04 billion has already been spent on ongoing projects.

With the recommended target price of Rs 140, if the stock is bought at Friday's closing price of Rs 130.75, the percentage of gain would be 7.07 percent.