Buy Persistent Systems: target of Rs 5550: Sharekhan

Sharekhan's research report on Persistent Systems

We expect PSL’s USD revenue to grow by 8.4% q-o-q to $197.5 million in Q3FY2022, led by strong demand, additional revenue contribution from acquisitions, and strong seasonality in IP-led business. PSL targets to achieve $1 billion revenue run-rate in the next 6-8 quarters, implying a CQGR of 4.6% to 6.5%, driven by strong demand, healthy deal intake, strong execution, and M&A activities. EBITDA margin to decline by 60 bps q-o-q to 16% in Q3FY2022, owing to higher ESOP expenses. We expect an additional impact of 30 bps on its EBIT margin owing to higher amortisation expenses.

Outlook

We retain Buy on PSL with a revised PT of Rs. 5,550, given strong earnings growth potential, healthy deal intake, and robust digital engineering capabilities.

More Info on Trent

At 17:30 Persistent Systems was quoting at Rs 4,902.20, up Rs 88.25, or 1.83 percent.

It has touched an intraday high of Rs 4,919.80 and an intraday low of Rs 4,801.75.

It was trading with volumes of 22,878 shares, compared to its thirty day average of 15,407 shares, an increase of 48.49 percent.

In the previous trading session, the share closed up 3.57 percent or Rs 165.90 at Rs 4,813.95.

The share touched its 52-week high Rs 4,919.80 and 52-week low Rs 1,480.00 on 31 December, 2021 and 01 January, 2021, respectively.

Currently, it is trading 0.36 percent below its 52-week high and 231.23 percent above its 52-week low.

Market capitalisation stands at Rs 37,465.06 crore.

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