Buy Persistent Systems; target of Rs 5010: Sharekhan

Sharekhan is bullish on Persistent Systems has recommended buy rating on the stock with a target price of Rs 5010 in its research report dated April 25, 2023.

Broker Research

April 26, 2023 / 13:32 IST

Buy

Sharekhan's research report on Persistent Systems

Persistent Systems reported strong constant currency (CC) revenue growth of 3.5% q-o-q beating our estimates of 3.0% (CC) revenue growth led by IT Services. Top-1 client’s revenues increased by 30.5% q-o-q in USD terms. EBIT margin was flat q-o-q at 15.4%, broadly in-line with our estimates of 15.5% owing to higher Project related travel expenses, royalty and SGA expenses. Total TCVs stood at $421.6 million, down 4%/ up 17% q-o-q/y-o-y. New business TCVs stood at $250.3 million versus $239 million in Q3FY2023, up 5%/28% q-o-q/y-o-y. Strong new business ACV at $168.3 million up 17%/28% q-o-q/ y-o-y We believe Persistent Systems is well-placed to navigate the near term uncertain environment owing to its ability to deliver industry-leading revenue growth on account of broad-based demand across verticals, robust order intake and new logo additions.

Outlook

Hence, we maintain a Buy rating on Persistent Systems with unchanged PT of Rs. 5,010. At the CMP the stock trades at 29.5x its FY2024E EPS and 25.1x its FY2025E EPS.

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