Subscribe to Persistent Systems IPO: Nirmal Bang

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Nirmal Bang has come out with a research report on Persistent Systems' IPO, which has been subscribed 2.75 times. The broking firm has recommended subscribing to this issue.

The initial public offering (IPO) of Pune based software product development company opened for subscription. The company plans to raise around Rs 157.17-168 crore at price band of Rs 290-310 per equity share via 54,19,706 equity shares issue.

The report says, "Based on price of Rs 310 (upper end of the price band) and company's annualized earnings (on 9M 2010 results) the company will trade at a P/E multiple of 11.68x which is higher than its peers. However, considering that company's business is superior as compared to its peer group, we believe that it should command a premium and therefore trade well above the P/E multiple of its peers. PSL has recorded strong growth in top-line and profitability in Q3 FY 2010 while its peer has witnessed a muted growth after excluding the impact of acquisitions."

"PSL's Sales was Rs 158 Crs and EPS was Rs.7.72 in Q3 FY 2010. Assuming that PSL registers similar top-line and margins in Q4 FY 2010 as we saw in Q3 FY 2010, its 2H FY 2010 results would be better than its 1H FY 2010 top-line of Rs 271 Crs and EPS 11.13 indicating that company is recovering rapidly from the downturn. Also, company looks attractive in terms of P/BV and EV/Sales multiple given that company is expected to grow at a rapid pace as compared to its peers. Therefore, we recommend subscribe to this issue," according to Nirmal Bang report.

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To read the full report click on the attachment