ICICI Securities Ltd. | Retail Equity Research

Puravankara Projects (PURPRO) (CMP- | 107) Strategy: Buy Puravankara Projects in the range of | 107 – 102 for a target price of | 136 with a stop loss below | 90 on a closing basis.

Puravankara Projects is a Bangalore based real estate player with a domestic as well as overseas presence. While the stock prices of some major real estate companies have caught investor attraction of late, we look at the price chart of Puravankara, which looks equally promising from a medium term perspective.

Double Bottom formation near 11% value from all-time peaks and at major Fibonacci retracement support The stock made its debut on the bourses at the fag end of the major bull run, which culminated at the 2008 peak. The ensuing market wide deluge saw the entire real estate space bleed profusely. The share price of Puravankara lost nearly 95% from its all-time peak of 534 in December 2012 to form an all-time low of | 25.50 towards January 2009. A relief rally from the all-time lows saw the stock rally during 2009-10 from | 25 levels to | 141 before once again entering a corrective phase.

The most dominating pattern on Puravankara’s price chart is the Double bottom bullish reversal hit a crucial support at ~ | 54. The stock retraced the 2009-10 rally by precisely 76.4% (Fibonacci ratio) and hit the double bottom around | 54 during December 2011 and May 2012. The double bottom low of around | 54 also coincides with 11% value from its all-time peak of | 534. Historically, it has been observed that stocks that have lost more than 90% market capital i.e. are trading around 11% value compared to the all time highs tend to post significant pullbacks once volumes also start picking up. Therefore, they offer a good investment opportunity from a medium term perspective.

Breakout past key resistance of | 90 with above average volumes after 18 months A careful examination of the price chart of the past three years reveals that the price level of | 90 has acted as an anchor point for major trend reversals. During December 2012, the share price conquered this important milestone on a closing basis for the first time in the past 18 months indicating a major shift in trend. Volume expansion during this break-out has been encouraging. This indicates increasing participation.

Momentum oscillators firmly poised Momentum oscillators like the 14 period Relative Strength Index (RSI) are poised firmly in the positive territory on a weekly and monthly time frame highlighting the underlying strength in the trend. Since October 2012, the 13-week EMA has acted as support for all price declines. This average is currently poised near | 90.

Following the breakout, we expect share price of Puravankara Projects to head towards its major resistance in the range of | 135-140, which is the area of Double top formation during August 2009 and October 2010.

Key Technical Data

Recommended Price 102-107

Price Target 136

Stoploss 90

52 Week High 111

52 Week Low 55

50 days SMA 90

200 days SMA 71

52 Week SMA 71 Analyst Dharmesh Shah dharmesh.shah@icicisecurities.com Nitin Kunte, CMT nitin.kunte@icicisecurities.com Dipesh Dagha dipesh.dagha@icicisecurities.com

Technical Breakout

ICICI Securities Ltd. | Retail Equity Research

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Exhibit 1: Puravankara Projects – Weekly Candlestick Chart

Source: Spider software, ICICIdirect.com Research

ICICI Securities Ltd. | Retail Equity Research

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Pankaj Pandey Head – Research pankaj.pandey@icicisecurities.com ICICIdirect.com Research Desk, ICICI Securities Limited, 1st Floor, Akruti Trade Centre, Road No 7, MIDC Andheri (East) Mumbai – 400 093 research@icicidirect.com Disclaimer The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of ICICI Securities Ltd (I-Sec). The author may be holding a small number of shares/position in the above-referred companies as on date of release of this report. I-Sec may be holding a small number of shares/position in the above-referred companies as on date of release of this report. This report is based on information obtained from public sources and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. This report and information herein is solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This report may not be taken in substitution for the exercise of independent judgment by any recipient. The recipient should independently evaluate the investment risks. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of the use of this report. Past performance is not necessarily a guide to future performance. Actual results may differ materially from those set forth in projections. I-Sec may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report. This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject I-Sec and affiliates to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction.