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  • 20 Oct 2022
  • ICICIdirect Research

PERSISTENT REPORTS WEAK NUMBERS

PERSISTENT - 6436 Change: 76.20 (1.20 %)

News:

 Persistent reported relatively weak numbers on revenues. Revenue was up by 5.8% QoQ to US$255.6mn, while it was up by 6.6% in CC (on the back of 9-12% CC QoQ growth in last 4 quarters). Geography wise North America (78% of mix) was up 6.1% QoQ, while India & Europe which forms 11.5% and 8.3% of revenue, reported revenue growth of 7.7% QoQ and 3.3% QoQ respectively. Moderation of revenues could be on account of sharp decline in its Top client revenue (revenue down by 21.3% QoQ/28% YoY) as well as muted performance in Top2-5 clients (revenue was up only 0.8% QoQ vs average growth of 10% QoQ in last 4 quarters. Vertical wise BFSI (32% of mix) have reported only 3% QoQ (vs average 11-12% QoQ growth in last 5 quarters). EBIT Margins improved by 30bps QoQ to 14.6%. LTM attrition declined by 110bps QoQ to 23.7%, down almost 320bps from peak of 26.9%. TCV remained healthy at US$368mn. Net addition was muted at 838 employee’s vs average 1500 in last few quarters.

View:

 The company’ top client performance (which is a major tech company globally) could be a reflection of client’s revenue guidance cut yesterday from high single digit to Mid-single digit growth in FY22. BFSI vertical moderation could be a macro related impact which could be ascertained in their earnings call today. Net addition was also muted. The only solace was moderation of attrition and continued healthy order book.

Impact:

Negative.