Sharekhan's research report on Persistent Systems
Persistent reported revenues of $291.7 million, up 3.2%q-o-q in constant currency (CC) terms, in line with our estimates of a 3.1% q-o-q growth. Sequential growth was led by Healthcare and Hi-tech verticals. EBIT margin fell by ~120bps q-o-q to 13.7% below our expectation of 14.1% primarily due to wage hikes. The company’s total TCVs stood at $479.3million, up 26%/30% q-o-q/y-o-y. Book-to-bill ratio stood at 1.6x in Q2FY24. New business TCVs stood at $313.1 million versus $237.2 million in Q1FY24, up 32% q-o-q. Persistent Systems delivered a fairly strong quarter with industry-leading revenue growth. We believe Persistent systems remains well placed to tide over the near-term uncertainty owing to strong order booking, decent contributions from top clients and broad-based demand across verticals.
Outlook
Hence, we maintain a Buy on Persistent Systems with revised PT of 6750 (increase in PT reflects the roll forward to FY26E EPS). At CMP, the stock trades at 32.2/26x its FY2025/26E EPS.
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