HDFC Securities' research report on Persistent Systems
We maintain REDUCE on Persistent Systems, despite its strong 1Q performance, as current valuations (at 16x FY22E vs. 14x 5-yr average) amply factor in the recovery trajectory. The Technology Services segment continues its steady performance supported by its large accounts mining, consolidated structure, and sales re-organisation. In contrast, the Alliance segment adds uncertainty to the revenue and operating profile based on volatility in re-seller revenue, despite the growth opportunities via Red Hat and Dassault ecosystem. The leadership changes in the organisation over the past year have stabilised and fortified the non-IBM business, but the IBM ecosystem remains a work-in-progress.
Outlook
Our upgraded target price is Rs 775, 14x Jun-22E, following ~16% EPS upgrade on growth/margin reset. The valuation discount to mid-tier peers reflects sub-par/volatile client mining, margins, and FCF as compared to peers.
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
Find the best of Al News in one place, specially curated for you every weekend.
Stay on top of the latest tech trends and biggest startup news.
Read More
