Persistent Systems headquartered in Pune, India offers specialized services in cloud computing, digitization, business analytics etc. Persistent has established strong leadership in few verticals viz., Enterprise software, Consumer Software, Innovation Services etc.

Background: Persistent Systems is one of the leading outsourced product development (OPD) companies in India. Revenue from business offering mix: Services (83.7%) & IP led business (16.3%). The company has industry expertise in ISV (41.7%), Enterprise (42%) and IP Led (16.3%). The company's business is spread across North America (80.2%), Europe (8.8%), and RoW (11%).Company earns revenue from global delivery centers (33%), India (50.7%) and IP Led (16.3%). Total active clients stood at 1000+ including services and IP led business. Company's top client accounts 19.2% in revenues, top 5 (41.5%) and top 10 (49.9%)....

The company's greater than US$5 million clients has increased by five over the past two quarters led by its focus on mining existing clients and winning multi-year large deals. In the current quarter, Persistent won four large multiyear deals in technology & emerging companies and financial services. This is expected to lead to healthy annuity revenues in coming years. In addition, the company's focus on improving its alliance business and improving European revenues in services segment will help boost overall revenues. This coupled with Persistent's partnership with Red Hat, strong salesforce partnership, acceleration in digital revenues in a post Covid-19 world and...

Marked shift in earnings trajectory on the cards We see Persistent System's (PSL) accelerating earnings at a ~25% CAGR over FY20-FY23 on the back of a ~13.5% INR revenue growth and an expansion in EBIT margins by ~450bps. Until 6-9 months back, PSL had been underperforming its peers due to a rather lackluster EPS growth of just ~4% over FY15-FY20 despite a ~13.5% INR revenue CAGR as its EBIT margin compressed by 650bps (entirely gross margin driven due to higher onsite mix, likely lower margins in IP, Alliances and offshore services businesses). This turnaround in our view can be partly attributed to Sandeep Kalra, the new CEO, who was heading its Technology Services...

Persistent reported inline revenue growth of 3.8% QoQ (Ple:3.2%) with strong performance from services business grew 5.3% QoQ to $114mn on 7.0% volume growth & IP-led revenue declined 3% QoQ to $22.1mn due to lower IP resale revenue. EBIT margin expanded by to 12.1% (Ple:10.9%) Gross margin expansion (+170 bps) was partially offset by higher SG&A; (-70 bps). Management guided current EBIT margin (12%) as sustainable inspite of salary hike in Nov-2021. Management expects to maintain EBITDA margin in...

We recommend BUY and assign 18x P/E multiple to its FY23E earnings of Rs. 78.0 per share which gives a TP of Rs. 1,404 per share, an upside of 18%.

Persistent Systems: We upgrade Persistent Systems (PSYS) to BUY (ADD earlier) due to a structural pivot towards growth acceleration, following underperformance in FY16-20 period. PSYS' relative outperformance in FY21 and growth acceleration (20% EPS CAGR over FY20-23E) is driven by (1) recovery in Technology Services (deal sourcing, partnerships, client mining, and improving annuity), and (2) better operational rigour and business synergies improving the operating profile translating into 22% FCF CAGR over FY20-23E. Revival in Alliance business (Red Hat, Dassault) and prospects of better capital allocation (cash ~19% of M-cap) are value-accretive triggers. Our target price is Rs 1,520, based on 21x Sep-22E EPS and supported by 20% EPS CAGR, >35% RoIC. ICICI Lombard: While FY21E is expected to be a muted year in terms of top-line growth, we believe ICICIGI will deliver lower CORs. We remain cautious on health claims as a second wave of COVID-19 may result in significant increase in claims. Additionally, changing regulations in motor are expected to drive down both claims and tariffs, creating supernormal profitability in the short term. We believe that this period (of supernormal profitability) will be short-lived, as we expect IRDAI to restrict TP pricing growth, thereby restricting profitability. We believe the market is not factoring this risk; accordingly, we rate ICICIGI a REDUCE with a target price of Rs 1,141 (DDM derived Sep-22E P/E of 26.4x and a P/ABV of 5.2x).

$136mn (DE 2.9%). OPM improved by 170bps QoQ to 12.1% (DE 10.6%) driven by sustained traction in TSU business (up 4.1% QoQ). Commentary turns further confident as the Newly instated CEO expect the turnaround in the Alliance business in FY22e both on growth as well as profitability, while expects momentum in the TSU business to continue to clock healthy growth led by robust deal-win momentum. Expect sustenance of Profitability despite impending wage hikes given potential for improvement in Alliance biz (offshore shift), efficiency in...

Persistent reported sequential revenue growth of 3.9% (USD) and an EBIT margin of 12.1% (~170bp expansion), ahead of estimates. Growth was driven by the Services business, partly offset by the IP portfolio due to seasonality in the Reseller business. Broad-based performance was encouraging. Healthy growth in Services despite a high base indicated steady progress on the turnaround. Management commentary further implied a healthy deal pipeline in the Services business. We expect this vertical to continue to deliver even with...

We retain our Buy rating on Persistent Systems Limited (PSL) with a revised PT of Rs. 1,450, as we expect strong earnings growth over FY2021-23E. Q2 numbers beat estimates on all fronts; deal signings remained strong for all...

Persistent Systems (PSYS) reported 3.9% QoQ dollar revenue growth, led by the services segment (+5.4% QoQ).

We initiate coverage on Persistent Systems Ltd (Persistent) with a BUY rating and target Price of Rs 1,580 valuing at 21x to its FY23E EPS .

Among mid-tier companies, PSL clocked strongest revenue growth given its exposure to less-impacted verticals such as BFSI, technology and healthcare Growth momentum in technology services would continue beyond FY21E led...

In a surprising development, Persistent System's (PSYS) CEO Christopher O'Connor has resigned after a short stint of 1.5 years.

Background: Persistent Systems Limited offers complete product life cycle services. The Company's segments include Infrastructure and Systems, Telecom and Wireless, Life science and Healthcare, and Financial Services. The Company's products include Connected Healthcare, which is an integrated healthcare ecosystem; ShareInsights Platform, which allows organizations to analyze an overlay of enterprise data with public or cloud sources to derive insights; Digital Banking, and Accelerite, which provides cloud solutions, endpoint management and mobility. The Company provides product engineering services, platform-based solutions and...

Persistent reported healthy Q1FY21 numbers. The company reported positive QoQ growth (up 3.1% QoQ) in dollar revenues vs. QoQ decline in revenues across other IT companies. Further, the EBITDA margin increased 100 bps to 14.8% (including one-time Covid related donation of | 7.4 crore)....

Persistent System's (PSL) 3.1% QoQ revenue growth in 1QFY21 in USD terms was much better than the 7.2% decline we were anticipating. EBIT margin at 10.4% was also much better than our estimate of 7.5%. Our expectation of a cut back in discretionary small project spend in a recessionary environment in developed markets did not come true in the current quarter for PSL. Its 3.1% QoQ growth was driven by the IP stream which grew 10% while IT services grew by ~2%. The accelerite IP revenue (~4% of revenue) has been added to the services revenue stream from 1QFY21 which hints at a potential decline in pure services revenue QoQ on a liketo-like basis. This is after a gap of 6 quarters of consistent growth for the services stream. PSL's margins improved sequentially and YoY mainly due to curtailment in SG&A; expenses by...

Persistent Systems (PSYS) reported a surprisingly strong set of numbers, with Q1 dollar revenue growth at 3.1% QoQ.

Persistent System's Profit for the quarter grew by 9.1%YoY/7.4% QoQ to Rs 900 Mn during Q1FY21. Consolidated revenue stood at Rs 9,914 Mn for Q1FY21 vs 8,321 for the Q1FY20 registering growth of 19.1%YoY/7.0%QoQ. Strong YoY and QoQ growth in Q1 was led by BFSI as it continues to be a standout. Reported EBITDA was up by 21.3%YoY/14.9% QoQ to Rs 1,458 Mn, as compared to Rs 1,202 Mn,...

Background: Persistent Systems is one of the leading outsourced product development (OPD) companies in India. 4QFY20: Revenue from business offering mix: Services (83.7%) & IP led business (16.3%). The company has industry expertise in ISV (41.7%), Enterprise (42%) and IP Led (16.3%). The company's business is spread across North America (80.2%), Europe (8.8%), and RoW (11%).Company earns revenue from global delivery centers (33%), India (50.7%) and IP Led (16.3%). Total active clients stood at 1000+ including services and IP led business. Company's top client accounts 19.2% in revenues, top 5 (41.5%) and top 10 (49.9%)....