Persistent Systems Ltd. share price target

Persistent (PSYS) delivered in-line revenue (~USD 113 mn) in Q1FY18 led by deal wins in traditional OPD services (up 5% QoQ) and IBM alliance (up ~10% QoQ as Q4 was a muted quarter for Watson). However, EBIT margin declined ~200 bps due to INR appreciation, accelerated front-end and business investm..

We've factored in (1) Revenue growth of 10.9/12.7% for FY18/19E implying 3.3/2.8% CQGR, (2) EBITDA% at 15.9/17.3% and earnings growth at 13.3% CAGR over FY17-19E (lowered EPS est. by ~3%). Maintain BUY with a TP of Rs 700, 14x FY19E. Persistent Systems (PSYS) delivered in-line revenue, while operational performance was sub-par. Higher margin and the non-linear portion of the business lagged in 1Q (Digital and Accelerite growth at -1.3% QoQ and -10.4% QoQ), which reflected in margins. EBITDA% dropped by 200bps QoQ to 14.3% in 1Q (-250bps QoQ adjusting for 4Q one-time charge, visa cost in 1Q and doubtful debt provisioning).

ICICI Securities Ltd | Retail Equity Research US$ revenues grew 3.6% QoQ to $112.97 million in line with our $112.2 million estimate while rupee revenues grew 0.1% QoQ to | 728 crore above our | 723.1 crore estimate EBITDA margins declined 200 bps QoQ to 14.3% and were way below our 16.3% estimate primarily led by higher employee expenses (up 2.8% QoQ) and travelling expenses (up 9.4% QoQ) Reported PAT of | 75.1 crore was in line with our | 75.3 crore...

We expect USD revenue CAGR of ~13%over FY17-19, driven by momentum in IBM deal and EDT. Expect 120-140 bps improvement in margin over next 2 years and forecast FY18E/FY19E earnings at Rs 43/ Rs 50.We rollover to FY19 and value the company at Rs 697 (14x FY19E EPS).

Revenue decreased by 2.47% to Rs. 727.11 Cr in Q4FY17 when compared to the previous quarter. On the other hand, it rose by 7.38% when compared with Q4FY16.

ICICI Securities Ltd | Retail Equity Research Persistent Systems (PSL) reported weak Q4FY17 earnings on the topline and bottomline front while EBITDA margins surprised on the upside by 40 bps due to lower expenses US$ revenues declined 0.9% QoQ to $109.03 million, below our 1.6% growth and $111.8 million estimate Revenues in rupees declined 2.5% QoQ to | 727.1 crore, below our 0.3% growth and | 747.6 crore estimate...

Persistent Systems (PSYS) posted muted 4Q revenue, while operating performance was encouraging. Revenue was impacted by a sequential decline in the IBM alliance business on seasonality, while Digital & Accelerite grew 10.7% QoQ. Margins improved on SG&A efficiencies, and the trajectory continues to look healthy (direct cost% lower by 150bps post IBM IoT integration).

Persistent's revenue declined by 0.9% QoQ to US$109mn, which was below our estimate by 2.4%. Despite 4Q being seasonally weaker following a robust quarter in December (due to CY-end of IBM, which contributes 26.5% to revenue), we expected marginal revenue growth. Volumes excluding IP saw a 0.8% QoQ dip, while blended pricing rose by 1.1% QoQ. IP-led volumes rose by 0.8% QoQ, while pricing declined by 4.5% QoQ. Service-wise, continuing its impressive performances over the past several quarters, Enterprise maintained healthy growth with 3.9% QoQ growth in USD terms. Notably, on YoY comparison, growth came in at a strong 27.4%, which suggests continuous investment by clients in digital/SMAC initiatives,...

Persistent Systems posted steady numbers for the quarter ended March 2017 with Rupee revenues declined by 2.5% QoQ to Rs 727 cr and inclined by 7.4% on YoY basis. Persistent Systems crosses USD 109.03 mn with growth of 8.6% YoY and declined by 0.9% QoQ. Profit Before tax dipped by 11.5% YoY and 6% QoQ to Rs 105...

Persistent (PSYS) posted accelerated revenue growth and modest improvement in operating performance. Growth in 3Q was enterprise-led (digital) as well as IP-led (IBM alliance), while ISV was flat (vs. decline in prior quarter). We note strong growth across large client buckets as well as improvement in employee productivity on higher non-linearity and efficiency improvement.