Moneycontrol
Last Updated : Aug 13, 2018 10:33 AM IST | Source: Moneycontrol.com

Persistent Systems may test Rs 960: AnandRathi

With its cash balance now, of USD 175m, it will be seeking more acquisitions to expand its geographical reach, mainly in non-US markets, and is not keen on acquiring legacy businesses.

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AnandRathi

We think Persistent Systems is can stage a strong recovery in FY19. Over the last two years, the company’s focus has been on digital, which has helped it build capabilities in key technology areas as it transforms to software-driven businesses.

The company will invest more in sales and marketing in FY19.

In FY19, part of the revenue shortfall is likely to be reversed and margins may be supported by currency/tax breaks.

With its cash balance now, of USD 175m, it will be seeking more acquisitions to expand its geographical reach, mainly in non-US markets, and is not keen on acquiring legacy businesses.

Levers to improve margins expansion are better business mix, incremental IP revenue, greater utilization ratio, pricing (up 4.5% y/y onsite, 2.5% offshore in Q4) and favorable currency factor.

We value Persistent at 18x FY20EPS, leading to Rs 960 target.

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on Moneycontrol are their own, and not that of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
First Published on Aug 13, 2018 10:12 am
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