Anand Rathi Sees 25% Upside In 2 Mid Cap, Small-Cap Stocks, Assigns Buy Rating

Leading brokerage firm Anand Rathi has given buy call to two stocks namely Karur Vysya Bank and Persistent Systems. The analyst has assigned buy call to these two stocks and expects a return of up to 25%. Check key takeaways below:

1. Karur Vysya Bank Ltd

Anand Rathi has assigned buy rating to Karur Vysya Bank with a target price of Rs 115 and a potential return of up to 25%. The current market price of the bank is Rs 92 apiece with 52-week high at Rs 96 apiece and 52-week low at Rs 41 apiece, respectively.

The bank has a market capitalisation of Rs 7393 crore. The bank has given a negative 18% return in last 5 years and positive return of 67% in last 3 years. The stock has jumped 83% in last 1 year only. In 3-months only, the stock has jumped 67%.

According to Anand Rathi, "KVB's Q2 FY23 profitability improved, its RoA coming at 1.16% (up 30bps y/y) on account of a good operating performance. Key positives for the quarter were 1) moderating slippages, 2) pick-up in credit growth (many-year high), 3) better margins and 4) strong liquidity and capitalisation. With credit growth expected to be in the mid-teens and moderating credit costs, earnings are expected to be strong. We retain our Buy rating, with a TP of Rs115, valuing the stock at 0.9x P/ABV on the FY25e book."

2. Persistent Systems Ltd

Anand Rathi has suggested investors to buy the stock with a target price of Rs 4410 apiece and likely return of 15%. The current market price of Persistent Systems is Rs 3831 apiece with 52-week high at Rs 4986 apiece and 52-week low at Rs 3091 apiece, respectively. The mid cap company has a market capitalisation of Rs 29,282 crore.

According to the analyst, "Persistent was resilient in key metrics despite the top client sliding 21% q/q as it reported 5% q/q (organic) company growth. Tailwinds came from the IP-led business, which surprised, absorbing almost half of the fall. The EBIT margin rose 27bps q/q, absorbing 230bps of the wage-hike impact and was 72bps higher y/y. TCV touched $368m, up 30% y/y and net new TCV was up 53% y/y; no slowdown yet. Management intends to maintain growth; margins would improve as supply challenges seem to be behind. We revise estimates ~10% driven by TCVs and margins. Target increased to Rs.4,410 (23x FY25, earlier Rs.4,290)."

Disclaimer

The stocks have been picked from the brokerage report of Anand Rathi. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.