Persistent Systems Ltd share Price Today

The IT sector has been in a corrective phase since beginning of CY22 over the past 18 months while digesting various negatives in terms of slowdown in US, higher interest rate cycle, US banking issues, etc. Meanwhile most stocks have undergone 30-40% correction from their peak after stupendous rally in 2020-21
 
Faster retracement of nine month’s correction in five months: Share price retraced January-September 2022 fall in just five months indicating structural improvement, resumption of uptrend. In current context, the stock is forming higher base above 100-day EMA giving fresh entry opportunity
 
Key observation: Persistent has been one of the few relative outperformers within IT pack that has managed to reclaim its life highs. Over past few months stock formed a higher base around 4300-4400 zone and resumed its uptrend post earnings

Persistent System (Persistent) offers cloud, data, product & design led services to BFSI, Healthcare & Hi Tech verticals. Persistent had a strong year (FY23) with revenue growth of 35.2% in dollar terms & rupee revenue growth of 46.2%. Persistent is a net debt free company reporting a healthy double digit return ratio (with RoCE of 20%)
 
Persistent achieved US$1 bn revenue in FY23 and is now aiming at US$2 bn annual revenue in the medium term. In FY24, the company is confident on maintaining 3-5% sequential growth rates in all quarters
 
Persistent has acquired five companies in FY22 building capabilities in payments, cloud, etc. Persistent has integrated all the acquired companies and is now actively looking for acquisitions to strengthen capabilities in the areas of cyber security, consumer tech, generative AI, healthcare & BFSI
 
The company continues to win strong TCV and in FY23 won a TCV of US$1.6 bn, up 32.8% with new TCV wins of US$0.9 bn, which provides sustainable revenue visibility. Persistent’s strong deal win momentum along with recovery in top clients revenue will aid in its revenue growth. We expect dollar revenue to grow at 18.1% CAGR in FY23-25E
 
We expect Persistent’s EBIT margin to improve by ~140 bps to 16.3% over FY23-25E due to the levers of fresher deployment, utilization improvement and pricing benefit
 
Persistent’s share price has grown by ~6x over the past five years (from ~₹ 778 in May 2018 to ~₹ 4,675 levels in May 2023). We value Persistent at ₹ 5,170 i.e. 26x P/E on FY25E

IT Consulting & Software company Persistent Systems announced consolidated Q4FY24 & FY24 results:

FY24 Financial Highlights:
- Revenue: Persistent Systems announced a revenue of USD 1,186.05 million for the financial year 2024, reflecting a YoY growth of 14.5%. In Indian currency, the revenue equated to Rs 98,215.87 million, representing a 17.6% increase from the previous year.
- EBITDA: Earnings before interest, taxes, depreciation, and amortization (EBITDA) for FY24 amounted to Rs 17,243.02 million, showing a growth of 13.5% over the prior year.
- PBT: Profit before tax (PBT) stood at Rs 14,476.06 million for the financial year, up by 16.7% YoY.
- PAT: Net profit after tax (PAT) increased by 18.7% to Rs 10,934.92 million.

Q4FY24 Financial Highlights:
- Revenue: Quarterly revenue amounted to USD 310.89 million, up by 3.4% QoQ and 13.2% YoY. In Rs terms, this was a revenue of Rs 25,905.26 million, a QoQ growth of 3.7% and a 14.9% increase from the same quarter in the previous year.
- EBITDA: EBITDA for the quarter was Rs 4,543.62 million, experiencing a 2.8% increase from the last quarter and a 9.1% hike compared to the same period last year.
- PBT: Profit before tax for the quarter grew by 1.6% QoQ to Rs 3,954.93 million, marking a 16.1% increase over the same quarter of the previous year.
- PAT: Net profit after tax for the final quarter of FY24 surged by 10.2% QoQ and 25.4% YoY to Rs 3,153.22 million.

Dividend:
- The Board of Directors recommended a final dividend of Rs 10 per share on the face value of Rs 5 per share for the financial year 2023-24.

Commenting on the results,Anand Deshpande, Founder, Chairman, and Managing Director at Persistent said,"Our continued success this fiscal year is a testament to our innovative spirit, remarkable resilience, and strategic foresight, powering the digital transformation journeys of our clients. We approach every challenge as an opportunity and every achievement as a stepping-stone for future endeavors. Our determination to excel in everything we do has helped us set new benchmarks in the industry. We will continue to push the boundaries to scale new heights in the coming year."

Commenting on the results, Sandeep Kalra,Chief Executive Officer and Executive Director at Persistent said, "As we reflect on fiscal year 2024, I would like to extend my gratitude towards our incredible team, clients, partners, and investors, whose continued trust has powered our impressive journey. Our industry-leading growth, strong operational rigor, and commitment to building differentiated capabilities led to Persistent’s recognition as the “Most Promising Company” of the Year by CNBC-TV18 at the 2023 India Business Leader Awards. We were also included in three prestigious capital market indices – MSCI India Index, S&P BSE 100, and S&P BSE SENSEX Next 50. As we enter the new fiscal year, we are confident in our ability to drive sustainable growth with strategic investments in disruptive technologies like AI and are excited about the road ahead."

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