KR Choksey's research report on Persistent Systems
Persistent Systems witnessed strong revenue growth of 45.43% on a YoY basis which was led by their Software, Hi-Tech and Emerging business which grew by 50.85% on a YoY basis, BFSI business which grew by 44.75% on a YoY basis and Healthcare and Life Sciences business which has improved by 34.13% on a YoY basis. Out of the total revenue, IP Led business share has increased by 13.3% and the remaining 86.7% share is of Services. Profitability had increased substantially on a YoY basis with an EBIT increase from INR 2082.98 million in Q3 FY2022 to INR 3332.04 million in Q3 FY2023. The EBIT margin has also increased from 13.96% in Q3 FY2022 to 15.36% in Q3 FY2023. PAT has also increased by 34.90%, to INR 2379.54 million in Q3 FY2023 from INR 1763.95 million in Q3 FY2022. However, there has been a decline in the margin from 11.0% in Q3 FY2023 to 11.8% in Q3 FY2022. The Total Contract Value (TCV) has reached USD 440.2 million and the Annual Contract Value (ACV) has reached USD 326.3 million. Net hiring was 122 employees on a QoQ basis and 5609 employees on a YoY basis.
Outlook
We continue with the target price of INR 4697 with a P/E multiple of 29.5x to FY24’s estimated EPS of INR 159, an upside of around 8.6% over the CMP. Accordingly, we maintain our rating to the “Accumulate” rating on the stock.
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