Arihant capital neutral on Persistent Systems

Arihant capital markets' research report on Persistent Systems

"Persistent has delivered mixed set of numbers with top line growth of 4.2% qoq in dollar revenue. Rupee revenues growth was higher at 6.6% qoq to Rs 495 cr, due to depreciation of all major currencies against USD. Offshore utilization increased by 450bp QoQ to 72.9% while onsite utilization declined by 120bp to 88.5%. Overall utilization level increased 400bp QoQ to 74.3%. Revenue from the top client is almost stagnant which a cause for concern. Revenue from top client declined by 4% QoQ, it is third consecutive quarterly decline for top client. Volumes in linear business grew by 5.9% QoQ. Onsite volume grew by 6.7% QoQ, while offshore volume grew by 5.8% QoQ."

Outlook:"Technology and innovation continues to be the center of company’s strategy to focus on the ‘How’ of digital transformation. Company has strengthened the leadership team to drive the technology-led strategy along with forming new partnerships. We have valued stock at P/E(x) of 18x to its FY16E earnings and have arrived at fair value of Rs 1,728 per share. At CMP Rs 1,726 stock trades at 18 (x) its FY16E earnings. We have ‘Neutral’ rating on the stock", says Arihant capital markets research report.

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