with a market valuation of 33,044.26 Cr, Persistent Systems is a Large-cap IT company. IT business Persistent Systems said its board has also approved payment of interim dividend 28 per share for the financial year 2022-23. This is the highest ever dividend declared by the company since its listing on 06-04-2010. Friday, January 27, 2023 has been set as the record date for the purpose of dividend, and will be paid to the members by Monday, February 6, 2023.
Persistent Systems reports 34.9% growth in consolidated profit after tax (PAT) or net profit of 237.95 crore for the December 2022 quarter as compared to a net profit of Rs. 176.40 crore in the year-ago period. Persistent Systems’ consolidated revenue grew 45.4% YoY 2,169.3 cr in Q3FY23 from 1491.7 cr in Q3FY22. Company reported EBITDA 401.55 Cr in Q3FY23 as compared to Rs. 251.08 Cr was reported in Q3FY22, representing a YoY growth of 59.92%. The company recorded an EPS of 31.90 per share in Q3FY23 as compared to 23.08 was recorded in Q3FY22, representing a YoY growth of 38.2%.
Research analysts at broking firm Anand Rathi said after Persistent Systems’ strong Q3 earnings, “Q3 continues to witness strong growth (3% q/q, 22% y/y org. est.), higher furloughs and Despite weaknesses. Some top accounts. Q3 is seasonally strong for IP revenue, registering 9% growth q/q, 7% y/y, improving its trajectory for the third consecutive quarter. TCV a $440m, up 32% y/y, and net new TCV was up 52% y/y, showing no signs of slowing. Going forward, the company looks to maintain its growth trajectory with discounts in terms of days receivable Intends. EBIT margin up 78bps q/q, up 140bps y/y, reflecting SG&A leverage. Tailwinds will continue as supply side pressure eases. We raise our FY24e/FY25e PAT by ~2.5%, and target ₹4,840 Rs (25x FY25) was earlier Rs 4,410.
Research analysts at MK Global Financial Services Ltd said, “PSYS reported better-than-expected operating performance in the third quarter. Higher-than-usual furloughs (150bps), fewer working days (50-100bps) and weakness in select customers Revenue grew 3.4% QoQ despite the impact. Management expects further expansion of furloughs in the next quarter to impact revenue growth by 50-75 basis points in Q4. Revenue growth was driven by software, hi-tech and emerging industries (4.1% QoQ ; ex-top clients: 7.7%), healthcare & lifesciences (2.9%), and BFSI (2.8%). The services business has posted 9.2% CQGR over the last eight quarters, and management continues to see strong demand, strong deals Confident of maintaining growth momentum (albeit keeping an eye on macro uncertainties) on the back of Intake ($440mn in Q3; 1.7x book-to-bill), healthy deal pipeline, adding new logos, and client Continued progress in mining. Management expects EBITM to grow by 200-300bps over next 2-3 years, ahead of our expectations, revenue growth, Flat pyramid, SG&A leverage with progress on client mining, and large deal traction. We raise our EPS by 1%-8% for FY23E-25E, factoring-in Q3 performance and higher margin assumptions. We maintain buy with TP of Rs 4,500/share on 25x Dec-24E EPS (earlier Rs 4,125).”
Research analysts at ICICI Securities said, “Persistent’s share price has appreciated ~5.5 times in last five years (~ to ~ From 770 in January 2018~ 4,258 level in January 2023). We have maintained buy rating on the stock. We Value Persistent 4,920 i.e. 26 times P/E on FY25E.
Research analysts at Sharekhan said, “Despite strong bookings and continued uptick in deal wins, the near-term outlook for FY24E looks uncertain due to global headwinds and a gradual recovery over the next few quarters. , we believe the structural growth story for the Indian IT sector remains intact and hence we maintain Buy on Persistent Systems with a revised PT of 5010 (to reflect the rollover of the FY25E EPS target multiple). On CMP, The stock trades at 32.9x/28.5x and 25.5x its FY23E/FY24E and FY25E EPS, respectively.”
Research analysts at HDFC Securities said, “Persistent Systems (PSYS) posted an in-line revenue and marginally better operating performance. Key positives include (1) Deal bookings were at an all-time high – Renewal and both net-new TCV, which provides substantial growth visibility (~55% of 9MFY23 net-new ACV revenue-rate) and positive commentary on Q4 order bookings; (2) on large deals with annuity and progress in client mining Focus, reflected in client base exceeding US$5 million, growing from 30 in Q2 to 34 in Q3 and continued growth in revenue per account (up 50% since pre-Covid) and (3) a recovery is expected in T2 accounts, which have been adverse to growth in recent quarters (T50 accounts grew ~8% Q-o-Q pre-T2). Achieving your margin aspiration is a risk to the upside for our estimates.PSYS (Top Pick in Mid-Tier IT) with a TP of Rs 5,230 Maintain buy at 32x Sep-24E EPS. Valuation drivers (currently at 28.5x FY24E) include industry-leading 25% EPS CAGR over FY22-25E, ~50% RoIC & FCF and improvement in payout.
Shares of Persistent Systems Limited closed on Friday on the NSE 4,311 each, up 1.24% from the previous close 4,258.15. The stock recorded a total volume of 738,210 shares as compared to 20-day average volume of 397,656 shares.
The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
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