Hot Stocks: Brokerages view on Persistent Systems, Ujjivan SFB, HDFC Bank and Craftsman Automation

Brokerage firm Investec maintained a buy rating on Ujjivan SFB. Goldman Sachs recommends a buy rating on HDFC Bank while Citigroup maintains a sell rating on Persistent Systems and ICICI Securities initiated a coverage on Craftsman Automation with a target of Rs 5557.

We have collated a list of recommendations from top brokerage firms from ETNow and other sources:

Citigroup on Persistent Systems: Sell| Target Rs 3790

The Q2 is likely to remain soft compared to expectations.

Persistent has performed well recently in the last 1 month. The stock is not factoring in near-term softness – decision-making has not improved.

Valuation is 35x 1-yr forward consensus EPS, which doesn’t leave room for disappointment. Valuations at 50% premium to NSE IT which is almost at peak levels.

Investec on Ujjivan Small Finance Bank: Buy| Target Rs 56

Investec maintained a buy rating on Ujjivan Small Finance Bank with a target price of Rs 56. A reverse merger should be completed over the next 3-4 months.

The reverse merger offers an arbitrage opportunity. The reverse merger will be ~12% BVPS accretive.

Ujjivan SFB continues to report strong performance, and the event risk in microfinance remains a risk.

Goldman Sachs on HDFC Bank: Buy| Target Rs 2051

Goldman Sachs maintained a buy rating on HDFC Bank with a target of Rs 2051. There is some overhang around the impact of I-CRR gone.

The impact of I-CRR on HDFC Bank would have been to the tune of Rs 400 cr. The fall in share prices is far more magnified than what EPS impact warrants, but the global brokerage firm continues to remain positive.

ICICI Securities on Craftsman Automation: Buy| Target Rs 5557

ICICI Securities initiated coverage on Craftsman Automation with a target price of Rs 5557. Craftsman Automation (CFTM) is undergoing diversification to reduce CV exposure and improve RoCE by casting/machining of engine cylinder blocks/heads for SUV makers like Hyundai, Kia, and M&M.

“By generating ~8% FCF/sales with ~22% RoCE, CFTM would be in a position to deliver steady fundamentals and sail through the CV downcycle in a smooth manner, in our view,” said the note.

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