Persistent Systems - Tops our conviction list - Espirito Santo Securities

We are raising our fair value on Persistent from Rs.500 to Rs.577 as we see a structural shift in its revenue and margin profile.

Persistent satisfies all the three criteria of a scalable outsourced product development (OPD) company: i) anchor clients and long relationships enable it to get access to the source code, which software product companies are generally wary about sharing with third party vendors; ii) strong operations and quality work enables it to attract talent and iii) OPD when added with IP (19% of revenues) and higher revenues from emerging technologies like mobility, cloud and big data (c.50% of revenues), becomes scalable.

We reiterate BUY on our top mid cap IT pick.

Source : Equity Bulls

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