Buy Persistent Systems; target of Rs 7600: Motilal Oswal

Motilal Oswal is bullish on Persistent Systems has recommended buy rating on the stock with a target price of Rs 7600 in its research report dated January 22, 2025.

Broker Research

January 23, 2025 / 21:18 IST

BUY

Motilal Oswal's research report on Persistent Systems

Persistent Systems (PSYS) reported 3QFY25 revenue of USD360.2m, up 4.3% QoQ in USD terms (est. 3.9%) and 4.6% in CC. EBIT margin stood at 14.9% (est. 14.4%). EBIT grew 12.2% QoQ/25.5% YoY to INR4.5b. PAT came in at INR3.7b (est. INR3.5b), up 14.8% QoQ/30.4% YoY. For 9MFY25, revenue/EBIT/PAT grew 20.3%/19.7%/21.5% vs. 9MFY24. We expect revenue/EBIT/PAT to grow by 24.2%/27.3%/22.9% YoY in 4QFY25. TTM TCV was USD594.1m, up 12% QoQ and 14% YoY (1.6x book-to-bill). We value PSYS at 55x FY27E EPS. Reiterate BUY with a TP of INR7,600.

Outlook

Our estimates are largely unchanged. The stock is currently trading at an admittedly expensive valuation. That said, owing to its superior earnings growth trajectory, on a PEG basis, we believe the valuation still has room for upside. We value PSYS at 55x FY27E EPS. Reiterate BUY with a TP of INR7,600.

For all recommendations report, click here