Tier-II IT company Persistent Systems Ltd reported sequential dollar revenue growth of 9.1% in the March quarter of FY22, ahead of analysts’ estimates. The growth was primarily aided by its services segment, while the IP segment reported a sequential decline in revenue in the March quarter.
The stock has been on investors’ radar screens for its many acquisitions in recent months. Note that in Q4FY22, company Invested in two companies, MediaAgility with Google Cloud capabilities and Data Glove with Microsoft Azure capabilities.
Analysts at Motilal Oswal Financial Services Ltd said the impact of these acquisitions ranged by 200-250 basis points. Barring this, revenue growth in Q4FY22 was 6.5-7% sequentially, the domestic brokerage house said in its results flash note. One basis point is one hundredth of a percentile.
Ebit margin at 14.1% in Q4FY22 was slightly higher than 14% in Q3FY22. Ebit is short for earnings before interest and tax. Analysts at Edelweiss Wealth Management say Ebit margins for the March quarter were ahead of their estimate of 13.5%, but these acquisitions are expected to negatively impact the company’s margins in the short term. However, they will be the key drivers of growth going forward.
The company’s deal wins in the March quarter remained strong with 54% new TCVs with a total contract value (TCV) of $361 million.
Another positive measure for its investors was that attrition on a 12-month basis was largely flat at 26.6% compared to 26.9% in 3QFY22. Analysts note that the company posted a strong headcount for the sixth consecutive quarter, up nearly 10% sequentially.
Meanwhile, the company’s shares were trading flat on the NSE on Thursday. Analysts say the near-term demand outlook and management commentary on the IP business will be key in the evening’s earnings call.