Deal pipeline strong; eye 19% PBT margins: Persistent Sys

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Deal pipeline strong; eye 19% PBT margins: Persistent Sys

Anand Deshpande, chief executive officer, Persistent Systems in an interview to CNBC-TV18 said, the company's margins and profits in the third quarter increased because of currency benefits.

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Anand Deshpande, chief executive officer, Persistent Systems in an interview to CNBC-TV18 said, the company's margins and profits in the third quarter increased because of currency benefits.

"Rupee revenue grew by 37.3% YoY and 12.4% QoQ, but on the dollar side it was a flat quarter in terms of the dollar earnings and we had a quarter of USD 51.66 million," he said.

The IT player said, it has a strong deal pipeline and is targeting PBT margins of 19% ahead. "We have several new things coming up in the context of cloud computing analytics and some of focused areas that we have focused our energies in," he added.

Below is the edited transcript of Deshpande's interview with CNBC-TV18. Also watch the accompanying video.

Q: Could you tell us about the numbers this time around? The rupee revenue has grown by about 12.5%, but there has been a huge bump up in the margins this time?

A: Rupee revenue grew by 37.3% YoY and 12.4% QoQ, but on the dollar side it was a flat quarter in terms of the dollar earnings and we had a quarter of USD 51.66 million. The profit and margins on the PAT, PBT, EBITDA have all gone up significantly, predominantly because of the dollar-rupee exchange rate differences that we have seen and some improvement on the operational sides.

Q: At the end of last you did mention that you would be scaling down your dollar revenue guidance. How does the situation look at this point in time, in terms of the deal pipeline and what kind of a run-rate do you think you can maintain?

A: The deal pipeline looks quite good. We have several new things coming up in the context of cloud computing analytics and some of focused areas that we have focused our energies in. So, all of that looks pretty good for the next quarter, with an adjusted guidance and with 3 quarters done, our Q4 guidance is also quite visible.

Q: Since most of your gains have come in courtesy the rupee, do you think this 26% margin is sustainable in the next quarter or do you expect a scale down on that account?

A: Lot of it depends on where the rupee ends during the quarter. But instead of looking at the margin at that level, we prefer to look at margin at EBT level and there we can get to 19-20%. That's the region in which we think it is realistic to operate on.

Q: What has the utilization rate been this quarter?

A: It has been 71%.

Q: Just a word on your IP revenues, what percentage of your total sales does that form and how is the way forward looking on that front?

A: During the quarter our IP revenue contributed 9.2% of the year and we expect a stronger Q4 on that. So, those are trending quite well at the moment.