Buy Persistent Systems target of Rs 2344: Prabhudas Lilladher

Prabhudas Lilladher's research report on Persistent Systems

Persistent has not only reported excellent performance in 4QFY21 (+4.6% QoQ USD) but also shown strong consistent revenue growth (+12.8% YoY USD) and margin expansion (+290 bps) throughout the year. Growth in 4QFY21 was led by strong growth in Services (+8.2% QoQ USD) which offset the seasonal decline in IP led revenues (-7.4% QoQ USD). We believe that strong revenue growth momentum can sustain given i) management’s confidence to win $200-250 mn TCV each quarter, ii) strong deal pipeline iii) improvement in growth trajectory of Alliance business, iv) broad-based growth across all three verticals and v) expansion of presence in Europe.

Outlook

We arrive at changed TP of INR 2344 (earlier: 2017). Persistent is currently trading at 25.3x/21.7x on FY22/23 earnings of INR 80.5/93.8 we continue to remain way ahead than cons estimates. Maintain Buy.