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 Q1FY25 results:

Financial Highlights:

• The company reported revenue of USD 328.2 million, with a margin percentage of 5.6%. This represents a QoQ increase of 5.6% and a YoY increase of 16.0%.

• In terms of Indian Rupees, the revenue stood at Rs 27,371.7 million, with a margin percentage of 5.7%. This marks a QoQ increase of 5.7% and a YoY increase of 17.9%.

• EBITDA were Rs 4,552.1 million, with a margin percentage of 16.6%. This reflects a QoQ increase of 0.2% and a YoY increase of 7.6%.

• The Profit Before Tax (PBT) amounted to Rs 4,005.4 million, with a margin percentage of 14.6%. This indicates a QoQ increase of 1.3% and a YoY increase of 30.4%.

• Profit After Tax (PAT) was Rs 3,064.2 million, with a margin percentage of 11.2%. This shows a QoQ decrease of 2.8% but a YoY increase of 33.9%.

Sandeep Kalra, Chief Executive Officer and Executive Director, Persistent: “I am pleased to announce our 17th consecutive quarter of revenue growth, underscoring our clients’ sustained trust and confidence in us. Our continued success is driven by resilience, innovation, and a strategic focus on future readiness.

We have pivoted to an AI-led, platform-driven services approach, deepening our hyperscaler partnerships and developing a suite of innovative solutions. Recognizing our transformative digital solutions, ISG, the leading advisory firm, ranks us as a Leader for Digital Engineering services in the US and Europe 2024, for the second year in a row.

Ms. Roshini Bakshi retired as an Independent Director from our Board after a decade. We thank her for her leadership and guidance. We are delighted to welcome Ms. Anjali Joshi as an Independent Director. Her vast expertise as a technology leader will enrich our Board and guide us on our growth journey.”

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