Reduce Persistent Systems – TP Rs.270 - Geojit BNP Paribas Financial Services Limited

- 'Reduce' rating is maintained on Persistent Systems with a target price of Rs.270 over one year.

- The company continues its impetus on its four focus areas – cloud computing, analytics, collaboration and mobility.

- It is also realigning its sales force and partnering with leading technology platform companies as part of its growth strategy.

- However, the company has cut its revenue projections for FY12 by 5 – 7% and hence, the 'reduce' rating is maintained.

- USD revenue guidance for FY12 has been reduced to USD 205 – 210 million from USD 220 million and PAT guidance to INR 1250 – Rs.1350 million, translating EPS of Rs.31- 33.05 for the year. Lower PAT and EPS projections are mainly due to lower revenue outlook. Positives of a weak domestic currency are also factored in while coming to the revised guidance.

- Though the stock is a play on the structural shift taking place in the industry, heightened demand uncertainty is not fully priced in the current valuation of the stock.

- On these grounds, 'reduce' rating is maintained with a target price of Rs.270 over one year.

Source : Equity Bulls

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