Hold Persistent Systems; target of Rs 100: Arihant Capital

Arihant Capital 's research report on Persistent Systems

Persistent System’s Profit for the quarter grew by 9.1%YoY/7.4% QoQ to Rs 900 Mn during Q1FY21. Consolidated revenue stood at Rs 9,914 Mn for Q1FY21 vs 8,321 for the Q1FY20 registering growth of 19.1%YoY/7.0%QoQ. Strong YoY and QoQ growth in Q1 was led by BFSI as it continues to be a standout. Reported EBITDA was up by 21.3%YoY/14.9% QoQ to Rs 1,458 Mn, as compared to Rs 1,202 Mn, while EBITDA margin expanded by 26bps YoY/101bps QoQ.

Outlook

At CMP of Rs 887, Persistent currently trades at FY20 P/E of 20x. Factoring in Q1FY21 results, we upgrade our revenue estimates for FY21-22. We value Persistent at P/E of 20x to its FY22E EPS 50, which yields target price of Rs 1,002 per share. We upgrade rating to Accumulate from Hold earlier.

Persistent Systems 28072020-ahri

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