Q3FY21 Company Update - Persistent Systems - ICICI Direct

Persistent System reported a healthy set of Q3FY21 numbers. Dollar revenues increased 7.4% QoQ to US$146.1 million, mainly led by 5.0% QoQ increase in services revenues (82% of revenues) and 19.8% QoQ increase in IP led revenues. Rupee revenues increased 6.7% QoQ to Rs. 1075 crore. In terms of verticals, growth was led by technology companies & emerging vertical (up 13.3% QoQ) and Lifescience & Healthcare (up 6.3% QoQ). In terms of geography, growth was led by Americas (up 5% QoQ), and Europe (up 24% QoQ). The EBITDA margin expanded 60 bps QoQ to 17% mainly due to lower provisions and CSR expenses. The company has declared an interim dividend of Rs. 14/share.

Valuation & Outlook

Focus on large annuity-oriented deals, client mining, improving alliance growth, acceleration in European revenues, digital prowess are key long term revenue growth driver for the company. This, coupled with healthy margin trajectory, healthy cash (to drive inorganic growth) prompt us to be positive on the company. Hence, we maintain BUY on the company with a revised target price of Rs. 1850 (21x PE on FY23E EPS) (earlier TP of Rs. 1380).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Persistent_CoUpdate_Jan21.pdf

Shares of PERSISTENT SYSTEMS LTD. was last trading in BSE at Rs.1531.45 as compared to the previous close of Rs. 1499.35. The total number of shares traded during the day was 11618 in over 1666 trades.

The stock hit an intraday high of Rs. 1555.85 and intraday low of 1482.05. The net turnover during the day was Rs. 17662235.

Source : Equity Bulls

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