Sharekhan's research report on Persistent Systems
Though revenue from IP-led business would decline on a sequential basis in Q4FY2021, we believe PSL would report growth in Q4 because of strong revival in the BFSI vertical and continued growth in the technology vertical. Management remains optimistic about Alliance business returning to its growth trajectory from Q1FY2022. This coupled with continued strong growth in TSU segment would help it to deliver industry-leading growth in FY2022. Strong balance sheet and potential strong earnings growth (23% CAGR over FY2021-23E) provide comfort on the stock despite the recent run up. Cash accounts for 13% of its current market capitalisation.
Outlook
We retain our Buy rating on Persistent Systems Limited (PSL) with a revised PT of Rs. 2,200, given strong revenue growth potential and scope of margin improvement.
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