Persistent Q1 profit seen down 8% at Rs 74 cr: Motilal

Motilal Oswal has come out with its first quarter (April-June) earnings estimates for the technology sector. The brokerage house expects Persistent Systems to report a 7.9 percent degrowth quarter-on-quarter (growth of 10.7 percent year-on-year) in net profit at Rs 74.4 croreSales are expected to increase by 3.6 percent Q-o-Q (up 40.2 percent Y-o-Y) to Rs 701.8 crore, according to Motilal OswalEarnings before interest, tax, depreciation and amortisation (EBITDA) are likely to fall by 3.6 percent Q-o-Q (up 40.2 percent Y-o-Y) to Rs 701.8 crore.Motilal Oswal's report on Persistent SystemsRevenue growth is expected to be strong at PSYS, led by the Enterprise segment and from pick up in the recently announced IBM Watson deal. Aided by these factors, we expect 1QFY17 revenue to grow 4.5 percent Q-o-Q to USD105m.We expect gradual pick up in IBM Watson IoT deal revenues with highest absolute revenue and consequently, margins in the December quarterHowever, EBITDA margins are expected to be under pressure because of additional costs associated with the IBM-Watson deal and visa expenses (facilities on top of the employees on-boarded). As a result of this, we expect 80bp YoY decline in EBITDA margins to 15.1 percent. Our PAT estimate for the quarter is Rs 744m, down 7.9 percent Q-o-Q owing to lower margins.Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.