Anand Rathi's research report on Persistent Systems
PSYS continues to deliver industry-leading growth (9% q/q org. in Services, surprising positively. It integrated Data Glove for a month (MediaAgility to be integrated from Q1) and had some IP revenue re-classified as services. In margins, it benefited from better realisations and onsite utilisation, leading to a flattish gross margin. SG&A leverage was offset by higher D&A, leading to a 14% EBIT margin, flattish q/q. Ahead, we expect 14%-14.5% margins, despite higher amortisation, on expecting EBITDA margin expansion.
We raise PAT estimates 9-15%, taking the target up to Rs4980, 34x FY24. We upgrade to a Buy recommendation.
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