Motilal Oswal's research report on Persistent Systems
PSYS posted a strong 1QFY23. In USD terms, revenue grew 11.1% QoQ (160bp above our estimate, an organic growth of 5.6% QoQ). EBITDA margin stood at 17.7% (est. 16.9%). It reported a TCV of USD394m, with 58% new business TCV. Employee additions, at 3,039, were the highest ever, despite an elevated attrition rate of 26.3% (down 30bp QoQ). The company maintained a strong performance in Services (+13.5% QoQ) and demand outlook. It also delivered its highest TCV, with a book-to-bill ratio of 1.6x. PSYS’ capability to win new deals is encouraging and should result in its sustained industry-leading growth in FY23. A strong order book and robust pipeline should allow PSYS to deliver a USD revenue growth of 35.8% in FY23, despite a higher base in FY22 (up 35% YoY). With a strong demand commentary and deal momentum, we expect PSYS to deliver top tier revenue growth among our midcap IT Coverage Universe (26% of over FY22-24E).
The stock is currently trading at 24x FY24E EPS. Our TP is based on 25x FY24E EPS. We reiterate our Neutral rating as we believe the positives have already been captured and the stock offers limited upside from current levels.
At 11:16 hrs Persistent Systems was quoting at Rs 3,311.85, down Rs 23.35, or 0.70 percent.
It has touched an intraday high of Rs 3,390.25 and an intraday low of Rs 3,295.00.
It was trading with volumes of 9,368 shares, compared to its thirty day average of 13,443 shares, a decrease of -30.31 percent.
In the previous trading session, the share closed down 7.38 percent or Rs 265.60 at Rs 3,335.20.
The share touched its 52-week high Rs 4,986.85 and 52-week low Rs 2,974.40 on 03 January, 2022 and 26 July, 2021, respectively.
Currently, it is trading 33.59 percent below its 52-week high and 11.35 percent above its 52-week low.Market capitalisation stands at Rs 25,310.81 crore.
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