HDFC Securities' research report on Persistent Systems
We maintain BUY on Persistent Systems (PSYS) and assign it in our top picks, due to a solid 3Q (in-line), strong growth visibility supported by robust TCV bookings (including high ACV component), and a structural pivot towards high growth. The strong technology-led differentiation overlaid by improved client mining/bigger deals and focus on partnerships/sourcing will drive PSYS into industry-leading quadrant. With growth markers established around Technology services, acceleration in Alliance can be an added trigger as PSYS realigns with top customer around Red Hat, hybrid cloud (Cloud Paks) opportunities. Operational performance continues to improve with margin improvement despite two-month impact of wage hike and stronger cash generation/payout.
Outlook
Our upgraded target price of INR 1,900 values PSYS at 22x Dec-22E (21x earlier), supported by 26% EPS CAGR over FY21-23E and >38% RoIC.
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