Buy Persistent Systems; target of Rs 5010: Sharekhan

Sharekhan is bullish on Persistent Systems has recommended buy rating on the stock with a target price of Rs 5010 in its research report dated January 19, 2023.

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January 20, 2023 / 17:25 IST

26 Aug, 2025 12:21

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Sharekhan's research report on Persistent Systems

Persistent Systems reported decent constant currency revenue growth, up 3.5% q-o-q, broadly in line with consensus estimates at $264.4million led by consistent growth in IP led and Services revenues. EBIT Margin at 15.4 %, improved by ~80 bps q-o-q led by currency benefits and easing of supply side pressure offset by headwinds from furloughs, seasonality and an increase in travel and facilities cost. Company reported strong deal wins for Q3FY23 with TCV of deal wins at $440million, up 20% q-o-q and Book-to-Bill ratio at 1.7x. New business TCV reported for the quarter was $239, up 5% q-o-q while Total ACV stood at $326.3 million, up 20% q-o-q. The management indicated that decline in revenue from top client has bottomed out and that the company expects revenue growth of at least over 30% for FY23. The management also stated that the company is well placed to maintain the quarterly deal win run-rate at above $400 million going ahead.

Outlook

Despite strong bookings and sustained acceleration in deal wins, the near-term outlook for FY2024E looks uncertain due to persisting global headwinds with gradual recovery coming in the next few quarters. However, we believe the structural growth story for Indian IT sector is intact and hence we maintain a Buy rating on Persistent Systems with revised PT of 5010 (to reflect the rollover of target multiple to FY25E EPS).

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