Cheviot Co. jumped 10.80% to Rs 792 after the Union Cabinet on Wednesday approved extension of norms for mandatory packaging in jute materials.
The Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi has accorded its approval for mandatory packaging of foodgrains and sugar in jute material for the Jute Year 2019-2020.The Government has retained the scope of mandatory packaging norms under the Jute Packaging Material (JPM) Act, 1987 as per last year. The decision of the Cabinet mandates that 100% of the food grains and 20% of the sugar shall be mandatorily packed in diversified jute bags.
Further, the decision also mandates that initially 10% of the indents of jute bags for packing foodgrains would be placed through reverse auction on the GeM portal. This will gradually usher in a regime of price discovery.
Nearly 3.7 lakh workers and several lakh farm families are dependent for their livelihood on the jute sectors. The jute industry is predominantly dependent on Government sector which purchases jute bags of value of more than Rs 7,500 crore every year for packing foodgrains. This is done in order to sustain the core demand for the jute sector and to support the livelihood of the workers and farmers dependent on the sector.
Cheviot Company is the flagship company of Group Cheviot. It owns Cheviot Jute Mills in West Bengal. The company manufactures jute products and jute fabrics with flexibility to cater to both domestic and international market.
The scrip rose 14.43% to hit an intraday high of Rs 818 so far during the day.
The counter also witnessed some amount of bargain hunting. The stock fell by over 13% in 8 sessions to Rs 714.80 on Tuesday from its closing high of Rs 825.05 on 14 November 2019.
On the technical front, the stock's RSI (relative strength index) stood 69.64. The RSI oscillates between zero and 100. Traditionally the RSI is considered overbought when above 70 and oversold when below 30.
The stock was trading above its 50-day placed at Rs 745.57 and 200-day moving average (DMA) placed at Rs 727.58.
Cheviot Co's net profit surged 34.7% to Rs 17.08 crore on a 28% increase in net sales to Rs 123.37 crore in Q2 September 2019 over Q2 September 2018.
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