Support/Resistance & Trendlines are one of the most important tenets of TA. Attached is daily chart of ADF foods which recently came out with a good set of numbers with a Yoy earnings growth of 24%. Of particular interest its distribution business which has a great ROCE of 38% and is growing at a rapid pace. Given that this biz was started in Q1’20 it has grown from strength to strength and from contributing 7% to the topline it now contributes 21% to it. A fast growing business generating an ROCE of 35% can easily be valued at 50-60x multiple , in ADF’s case this business is likely to close the year with a net profit of 10-12 cr and can easily contribute 20 odd crs to the net profit next 1-2 years making only this component worth 1000 cr, which is 75% of current the current market cap. The co is almost debt free & has 74 crs of cash/investments + the rest of the foods business is also doing well with good margins and returns on capital.
