Anand Rathi is bullish on Persistent Systems has recommended buy rating on the stock with a target price of Rs 630 in its research report dated May 07, 2020.
Anand Rathi 's research report on Persistent Systems
In services Persistent’s Q4 was strong ($106m, up 4.2% q/q), driven by new smaller assignments (in India) as $1m+ clients slipped by three q/q. The top client declined 12% q/q; it now brings 19% to business (24% two quarters back). Weak IP ($20.7m, down 19% y/y) brought just 16% to revenue, down from 22% a year ago. This should ease growth volatility. The EBIT margin (9.2%, up 51bps q/q, down 144bps y/y) has started reflecting trends in the services margins, as IP contribution shrinks.
The cut in our estimates is 12%/7%, and we lower our target to `630 (from `670)at 13.5x FY22 EPS.
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