Persistent Systems Ltd - Retain REDUCE on expensive valuations - Emkay

Reco: REDUCE
CMP: Rs 1052
Target Price: Rs 930

- Mar'14 revenues at US$ 72.6 mn(+3.9% QoQ), a tad short of expectations despite the seasonal strength in IP business. Margins at 27%(-80 bps QoQ), inline with estimates

- Profits at Rs 672 mn (+4.6% QoQ), lower than estimates on a/c of revenue miss. Platform,IP business continue to drive growth while linear business continues to struggle

- Company more confident of revenue growth in Platform and IP revenues in FY15 while progression of revenue growth rate in linear business still work in progress

- Raise FY15/16E by 12/6% on a/c of lower taxes/higher other income as we moderate revenue estimates a tad. Retain REDUCE on expensive valuations with a revised TP of Rs 930

Source : Equity Bulls

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