Persistent Systems Ltd. share price target

Background: Persistent Systems is one of the leading outsourced product development (OPD) companies in India. Revenue from business offering mix: Services (86.7%) & IP led business (13.3%). The company's business is spread across North America (79.2%), Europe (8.3%), and RoW (12.5%).Company earns revenue from global delivery centers (31.4%), India (55.3%) and IP Led (13.3%). Total active clients stood at 1000+ including services and IP led business. Company's top...

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Strong revenue growth momentum over past three quarters led to 33% YoY growth in 9MFY22. We believe this momentum can sustain given 1) strong deal TCV of $334.3 mn, +18% QoQ,11% YoY with 47% net new wins and TTM TCV now at $1.108 bn, 2) strong deal ACV of $291.3 mn, +45% QoQ, 14% YoY with 44% net new wins and TTM ACV now at $881.9 mn and TTM book-to-bill ratio of 1.26x, 3) strong headcount addition with total headcount up 37% YoY....

Persistent Systems (PSYS) reported a strong 3QFY22, with revenue growth (USD) of 9.2% QoQ (120bp above our estimates; 6.7% QoQ organic) and 16.8% EBITDA margin (est. 16.1%). It reported a TCV of USD334m (+18% QoQ), with 47% new business TCV. While seasonal strength in IP business aided 3Q growth, the continued good performance of its Services (+5.4% QoQ organic growth) on a base of double-digit sequential growth in last two quarters denotes the momentum in PSYS' client mining. Moreover, PSYS continues to...

Above-expected Q3 with revenue growth of 9.2% QoQ USD led by IP business

Background: Persistent Systems is one of the leading outsourced product development (OPD) companies in India. Revenue from business offering mix: Services (87.5%) & IP led business (12.5%). The company's business is spread across North America (78.7%), Europe (8.8%), and RoW (12.5%).Company earns revenue from global delivery centers (30.4%), India (57.1%) and IP Led (12.5%). Total active clients stood at 1000+ including services and IP led business. Company's top...

We recommend a BUY rating on the stock and assign a 36x P/E multiple to its FY24E earnings of Rs 126.7/share to arrive at a TP of Rs 4,520/share, indicating an upside potential of 12% from CMP.

Strong headcount addition over last 4 quarter led to headcount increase of 47% YoY indicating strong revenue growth momentum. Persistent reported revenue of $182.3 mn, growth of 9.3% QoQ USD, much above our and cons estimates (Ple: 8%, Cons: 6.3%). Growth was strong across all three verticals. Onsite price declined (-2.7% QoQ) due to change in...

We assign 43x to its FY23E earnings of Rs 96 and arrive at a target price of Rs 4,100/share with an upside of 10%.

We recommend a BUY rating on the stock and assign a 35x P/E multiple to its FY23E earnings of Rs 96/share, which gives a TP of Rs 3,400/share, implying an upside potential of 12% from CMP.