Dolat Capital's research report on Persistent Systems
Persistent reported results above expectation, with 3.1% QoQ growth in $ terms (DE decline of -1%). OPM improved by 110bps to 10.4% QoQ (DE 60bps) driven by conscious savings in travel & facility cost and improved business mix. Commentary remains confident and expects momentum to continue in Q2 given large number of proactive deals as well as RFQs in its pipeline. Also expect gains from client mining through vendor consolidation and positive turnaround in Alliance. Profitability is likely to improve further as discounts unwinds, large-deal transitions to return phase and potential savings in Sub-con cost.
Accounting for its strong performance, confident commentary and improved business traction (deal wins) and margin levers we have upgraded our estimates for FY21/22E by ~5%. However, given the sharp run up in the stock we now assign Reduce rating on the stock with TP of Rs840 valued at 16x FY22E earnings.
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.