Buy Persistent Systems; target of Rs 5500: Sharekhan

Sharekhan's research report on Persistent Systems

Persistent reported revenues of $282.9 million, up 3%q-o-q/17.1% y-o-y in constant currency (CC) terms, nearly in line with our estimates of $283.6 million. EBIT margin fell ~50 bps q-o-q to 14.9% missing our estimates of 15.5%, as the tailwind of revenue growth was offset by higher SG&A costs, higher amortization costs, and doubtful debt provision. Order booking moderated to $380.3 million in TCV, down ~10% q-o-q/3% y-o-y. Persistent would endeavour for aspirational quarterly growth of 3-5% in a good economy and 2-4% in a bad economy. Persistent Systems continues to deliver industry-leading revenue growth despite challenging macro environment on account of consistently decent order booking, strong contributions from top clients and broad-based demand across verticals.

Outlook

Hence, we maintain a Buy rating on Persistent Systems with revised PT of 5500. At the CMP, the stock trades at 30.1/24.4x its FY24/25E EPS.