Accumulate Persistent Systems; target of Rs 4131: KR Choksey

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26 Aug, 2025 12:21

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KR Choksey's research report on Persistent Systems

Persistent Systems Limited (PSYS) Q2FY23 performance was slightly higher than our estimate. Dollar Revenue was up 5.6% QoQ to USD 255.6Mn (KRChoksey est. USD 254Mn). Rupee revenue grew by 9.1% QoQ to INR 20,486Mn (KRChoksey est. INR 20,272Mn). Reported operating margin was marginally higher at 14.6%, aided by IP-business performance, lower sub-con cost & better segmental margin from Tech vertical & absence of visa cost which was partially offset by wage hike (-230bps). Reported net profit grew by 4% QoQ to INR 2,200Mn (KRChoksey est. INR 2,186Mn) with margin of 10.7%, down 53 bps QoQ. Persistent remains confident of maintaining operating margins within a narrow range in FY23 aided by growth leverage/revenue mix. PSYS’ profit is expected to increase materially over FY22-25E, supported by continued client mining (USD 5mn+logos doubled in the last two years) and increase in deal size (net-new deal duration increased from 1.2 years to 1.7 years over the last two years).

Outlook

Our target price of INR 4,131 is based on 28.5x Mar-24E EPS with EPS CAGR of 26.7% over FY22-24E.

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Persistent Systems - 231022 - kr