Cholamandalam Securities is bullish on Persistent Systems has recommended buy rating on the stock with a target price of Rs 754 in its research report dated January 29, 2019.
Cholamandalam Securities' research report on Persistent Systems
In 3QFY19, Persistent Systems’ consolidated revenue grew by 3.4% QoQ to INR 8,642mn (in line with CSEC estimates of INR 8,634mn) on account of healthy growth in ISV and Enterprise segments coupled with tailwinds of INR depreciation. Digital revenues which posted subdued numbers in the last few quarters accelerated and grew by 6.5% QoQ. Revenue grew by 2.2% QoQ to USD 120.8mn. EBITDA grew by 18.6% QoQ to INR 1,703mn, and EBITDA margin was at 19.7% an expansion of 250bps QoQ on account of currency benefit (+50bps), stable SG&A costs and higher utilization which improved from 81.9% to 82.1% in 3QFY19. PAT for the quarter stood at INR 917mn, up by 4.1% sequentially as lower other income was offset by higher margins.
At the CMP, the stock is trading at 11.1x/10.0x FY20E/21E. We arrive at a price target of INR 754 based on P/E of 13.0x FY21EPS and give a BUY rating on the stock.
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