Emkay Global Financial's report on Persistent Systems
PSYS reported better-than-expected operating performance in Q4. Revenues grew 9.1% QoQ/42.2% YoY (6.8%/36% organic) to USD217.3mn on the back of strong consistent growth in the Services business (14.7% QoQ). EBITM was flat sequentially at 14%. Revenue growth was broad-based across BFSI (9.8% QoQ), Healthcare & Life Sciences (9.1%) and Software, Hi-tech & Emerging industries (8.7%). Order booking stood at USD361mn (1.7x book-to-bill) in TCV, including USD195.1mn of new business TCV. Services revenues grew 14.7% QoQ to USD198mn, driven by 10.8% volume growth. Services has posted an ~11% CQGR in the last four quarters, and management remains confident of sustaining growth momentum. IP-led revenues declined 27% QoQ largely due to the restructuring of the CE/CLM IP deal with IBM to a T&M services model.
Outlook
We raise our FY23/FY24 EPS estimates by 6.5%/4.9%, factoring in Q4 performance, integration of the Media Agility acquisition and higher EBITM assumptions. We maintain Buy with a TP of Rs4,850 at 35x Mar’24E EPS (earlier Rs4,600), considering favorable industry tailwinds and a strong earnings trajectory (~24% EPS CAGR over FY22-24E).
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Read More
