Persistent Systems Ltd. share price target

Revenue grew 2.2% QoQ (- 1.4% YoY) to USD120.8m in 3QFY19 (in line with our estimate of USD120.5m). EBITDA grew 18.5% QoQ (+23.8% YoY) to INR1.7b (12.5% beat). PAT grew 4.1% QoQ (flat YoY) to INR917m (18% above estimate led by 28 January 2019 operating profit beat). Services revenue grew 3.1% QoQ (+1.1% YoY) to USD90.

modelled earlier). Our USD/INR assumptions are at 70/72/72.5 for FY19/20/21E. Led by strong margin execution in Q3 we now model EBITDA margins at 17.9/16.9/18% for FY19/FY20/FY21E (vs 16.9/16.8/18% modelled earlier). Persistent's revenue growth for FY19 would be lowest among midcap peers. Hence, stock is likely to remain trading at cheap P/E multiples over the medium term. Stock trades at 10.7x FY20E EPS and 9.7x Sep20E EPS. We marginal upgrade our EPS estimate for FY19 by 1.1% to Rs46. However, we...

Persistent Systems (PSYS) at its investor and analyst day said that it would be absolutely responsive to the change required for reviving revenue growth. It has confirmed that it is separating the Chairman and MD position and would appoint new MD with a clear focus on driving revenue growth. Accordingly, it would also continue to refresh the sales team and go-to-market. PSYS reiterated its strong presence in software product engineering. It said that it would continue to focus on platforms and partnerships for technologies including Data/AI/ML, Cloud, Security and IoT across Healthcare & Life sciences, BFSI and...

We attended Persistent Systems' (PSYS) Analyst Day, where the company showcased - through panel discussions - its capabilities and references in the areas of Data/Machine Learning/IoT/Cloud for catering to industries such as BFS and Healthcare & Life Sciences.

Persistent reported a weaker-than-expected quarter on the revenue front. The revenue decline was mainly on account of weak seasonality in the IP business, weaker execution in digital &...

The digital & the services business has now been merged. For the sales team, employee compensation will be based on commission basis (% of sales). The company lost a few employees...

IP revenue volatility continues: Persistent Systems indicated better revenue growth and margin improvement in H2FY19 which will partly mitigate the impact of one-offs in Q2FY19. Revenue growth will be supported by good deal wins, project starts in Q2FY19, higher contribution from healthcare business (strong demand on the digital side and higher deal sizes), meaningful jump in IP business and the reseller segment due to seasonally strong Q3FY19. In Q2FY19, it has added net 400 people reflecting strong project pipeline. Margin improvement will be supported by better sales mix...

Q2FY19 USD revenue declined by 4.3% QoQ/flat YoY led by decline in IPled revenue (-10% QoQ) and services revenue (-2% QoQ). EBITDA Margins improved by 200bps QoQ/40bps YoY largely driven by INR depreciation and higher offshoring. Better business mix, improvement in utilisation, higher IP deals & higher onsite utilisation would drive PSYS' profit margins going forward....

Maintain BUY with TP of Rs 850, at 15x Sep20E-EPS (16x earlier). Persistent (PSYS) posted weak revenue performance impacted by absence of re-seller revenue (2Q vs 1Q), early closure of large project and offshore shift. Revenue came at USD 118.2mn, -4.3/+0.1% QoQ/YoY (USD 5.4mn lower QoQ) impacted by, (1) Flat Services segment (43% of rev and -0.9% QoQ), (2) Drop in Alliance segment (29.5% of rev and -12.1% QoQ), and (3) Decline in Digital (22% of rev and -1.7% QoQ). EBITDA margin stood at 17.2%, +40bps QoQ with INR depreciation/offshoring offsetting wage increase impact, and APAT came at Rs 0.88bn.