Ilika PLC

Ilika PLC (LON: IKA) is a FTSE AIM All-Share index listed solid-state battery technology entity, which is focusing on developing and commercializing its thin-film StereaxÒ miniature solid-state batteries.

Investment Rationale for Valuation – Watch at GBX 108.20

• Weak Financials: On 20 January 2022, IKA released its H1 FY22 and reported
  • A significant decline in revenue (generated through grant funding) and increase loss per share to 2 pence (H1 FY21: 1 penny).
  • Increased operational costs aggravated the EBITDA loss to £2.7 million (H1 FY21: £1.0 million).
• Commercialization: In FY23, IKA expects to commence the sales from the commercialization of Stereax.
• Macroeconomic Risk: British inflation hit a 30-year high of 7% in March 2022, which may cause a further interest rate hike. The World Bank has reduced its global growth forecast for 2022 from 4.1% to 3.2%. Moreover, the lockdown in China can worsen the global economic outlook.
• Technical Indicator: The MACD line has given a bearish crossover against the signal line, while it is hovering below the centreline.

One Year Share Price Chart

 (Source: REFINITIV; Analysis done by Kalkine Group)

Conclusion

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Based on the weak fundamentals, bearish price momentum, and uncertain macro conditions, we have given a “WATCH” recommendation on Ilika PLC at the current market price of GBX 108.20 (as of 29 April 2022, at 12:50 PM GMT+1).

Investors can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario.

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions should be made depending on the investors' appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

Note 3: ‘Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.’ 

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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