Arihant Capital recommended hold rating on Persistent Systems with a target price of Rs 614 in its research report dated July 26, 2019.
Arihant Capital's research report on Persistent Systems
Persistent Systems came out with muted set of numbers in Q1FY20, which were a tad below our estimate. Revenue was flat (-0.3% YoY) at Rs 8321 mn against our estimate of Rs 8460 mn. EBITDA stood at Rs 1202 mn against our estimate of Rs 1360 mn. PAT for the quarter stood at Rs 825 mn, slightly below our estimate of Rs 865 mn. Due to management transition and client specific (IBM) issues, we already toned down our estimate post last quarter result. As expected, this quarter was lacklustre for Persistent and Q1FY20 numbers mostly matched our estimate. We are of the opinion that it will take time for the new management to catapult the company in a new growth orbit and till that time stock price might remain under pressure.
We have neutral view on the stock in absence of any near term trigger, however due to inexpensive valuation maintain our Hold rating with a revised target price of Rs 614.
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