Persistent Systems Limited posted strong and broad-based growth in Q4FY22 and beat analysts’ expectations on all key parameters. Growth was led by the company’s strong execution capabilities, higher utilization and lower travel costs during the quarter, highlighted brokerage Axis Securities in a note.
“While most of the verticals are witnessing a strong recovery and supported by a robust deal pipeline, they are expected to continue to report growth in the coming quarters,” the note said.
Recommending it as its top pick, the brokerage house maintains its Buy rating IT stock with a target price of 4,760. Shares of Persistent Systems are up nearly 93% in the one-year period, however, the stock is down more than 15% so far in 2022 (YTD).
“Persistent Systems’ management has made cost optimization efforts that help them achieve long-term sustainable operating margins. Improved service mix, reduced marketing spend, reduced travel costs, employee restructuring and improved utilization are some of the tailwinds for us. We believe that achieving efficiencies on the business will help them achieve greater profitability and higher return ratios,” Axis Securities said.
persistent system The deal pipeline remained industry-leading at $361 million in Q4FY22. The IT company has won many major transformation deals despite uncertainty and across verticals like BFSI, Communications, Manufacturing, Automobiles. According to the brokerage, this healthy deal pipeline will help improve revenue visibility for FY23E and FY24E.
Persistent will continue to invest in digital technologies, digital talent and S&M which are essential to drive growth. Axis Securities believes that the COVID outbreak will create huge opportunities across geographies to post strong organic growth across various sectors.
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