Buy this small-cap laggard under Rs 50 to gain upto 35%: HDFC Securities

PTC India Financial Services Ltd is HDFC Securities’ pick of the week. The shares closed at at Rs 39.9, down by more than 1.4%. HDFC Securities has a target price of Rs 54.

PTC India Financial Services Ltd is HDFC Securities’ pick of the week. The shares closed at Rs 39.9, down by more than 1.4%. HDFC Securities has a target price of Rs 54, with a time horizon of 4-6 quarters. The research firm’s target price implies an upside of more than 35% from the current market prices. In the year so far, while the BSE small-cap index has returned more than 42%, PTC India Financial Services has given abysmal returns of 7% since January.

According to HDFC Securities, the  scrip is likely to gain owing to the government’s plan for power for all. In September, Prime Minister Narendra Modi gave a big push to an ongoing mission to get all households in the country electrified by launching a Rs 16,320-crore scheme — Pradhan Mantri Sahaj Bijli Har Ghar Yojana (Saubhagya) — to achieve the coveted goal by the end of December 2018. “India is the third largest producer and fourth largest consumer of electricity in the world. The power sector has always been the lifeline of India’s economy and and is one of the prime sectors of growth and development in the economy.  PFS will be huge beneficiaries of the power push of the government. PFS is exclusively devoted to power sector and thus has acquired deep domain expertise over the years,” HDFC Securities observed in its report.

Track live stock prices: PTC India Financial Services LtdAdani PowerAdani Transmission Ltd

HDFC Securities says that PTC India is adequately capitalised and the NPA resolution in the company is on track. Further, PTC India has healthy financials and a high dividend yield, noted HDFC Securities in its report. In an interview CNBC TV18 yesterday, Ruchit Jain of Angel Broking said, “Buy PTC India Financial Services with a stoploss at Rs 39.70 and target of Rs 47.”

While HDFC Securities is bullish on PTC Financial Services on the government’s power thrust, CLSA had raised concerns regarding its implementation.  CLSA had retained a sell call Adani Power and Adani Transmission Ltd, as the firm believes that India doesn’t have a viable business model for power distribution companies in India.  

Kameswara Rao, leader, energy, utilities and mining, PwC India, said yesterday “The last-mile connectivity has always been a challenge, with households facing high connections costs, and states facing higher supply costs. So, this attempt to address both, by funding energy efficient equipment, is a positive step.”  

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