Buy Persistent Systems; target of Rs 4840: Anand Rathi

Anand Rathi's research report on Persistent Systems

Persistent clocked strong growth in Q3 (up 3% q/q, 22% y/y org. est.), despite more furloughs and weakness in a few top accounts. Q3 is seasonally strong for IP revenues, registering 9% growth q/q, 7% y/y, improving its trajectory for the third consecutive quarter. TCV was a strong $440m, up 32% y/y, and net new TCV was up 52% y/y, showing no signs of slowdown. Ahead, the company intends to maintain its growth trajectory, with leeway in terms of receivable days. The EBIT margin rose 78bps q/q, 140bps y/y, reflecting SG&A leverage. Tailwinds would continue on supplyside pressures easing.

Outlook

We raise our FY24e/FY25e PAT ~2.5%, and target to Rs.4,840 (25x FY25) earlier Rs4,410.

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Persistent Systems - 20 -01-2023 - anand