Buy Persistent Systems; target of Rs 5880: HDFC Securities

HDFC Securities is bullish on Persistent Systems has recommended buy rating on the stock with a target price of Rs 5880 in its research report dated April 25, 2023.

Broker Research

April 26, 2023 / 12:18 IST

Buy

HDFC Securities' research report on Persistent Systems

We maintain BUY on Persistent Systems (PSYS) as our top pick in mid-tier IT based on (1) strong order booking (highest new deals), consistency in large deal wins and increased deal participation with the company crossing USD 1bn threshold providing growth visibility; (2) improved client mining/crosssell/annuity reflected in revenue/client in services (1.6x in last two years as compared to flat over FY15-21) and USD 5mn+ client count up 3x in three years, supported by leveraging partnerships and recent acquisitions; and (3) scope for margin expansion supported by utilisation and efficiencies, SG&A leverage, and T1 growth rebound. Q4 performance was broadly in line with revenue, driven by the T1 account offset by a decline in IP-led revenue and project rampdown of hyper scaler client. Improved outlook for T2 accounts (incl. USD 100mn TCV deal) will support near-term growth trajectory.

Outlook

Our TP is INR 5,880, valuing PSYS at 32x Dec-24E EPS, supported by 25% EPS CAGR over FY23-25E.

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