Arihant Capital has given Neutral recommendation for Persistent Systems with a target price of Rs. 4173 in its research report issued on Apr 29, 2022
Arihant Capital’s research report on Persistent Systems
Persistent System (PSL) has reported a strong set of numbers in Q4 FY22, USD revenue, PAT, INR revenue and Margin are above our estimates. USD Revenue growth +42.2% YoY/9.2% QoQ to $217.3 Mn against our estimate of $214 Mn backed by strong capabilities in designing and engineering new digital experiences, revenue streams, and business models for clients. Consolidated revenue stood at INR 16,379 Mn, against our estimate of INR 16,144 mn registering +47.1%YoY/+9.8%QoQ. Consolidated EBIT stood at INR 2,300 mn, against our estimate of INR 2,180 mn, up by 57.1%YoY/+10.4% QoQ. On the margins front, EBIT margin expanded by 89bps YoY/+8bps QoQ to 14.0% against our estimate of 13.5%. Consolidated PAT saw a rise of 45.9%YoY/+13.9% QoQ to INR 2,009 mn against our estimates of INR 1,684 Mn. EPS stood at INR 26.3 in Q4 FY22 against INR 23.08 in Q3 FY22 (INR 18.03 in Q4FY21). Healthy deal wins order book for Q4FY22 at $361 Mn in total TCV and at $261.90M in Annual Contract Value (ACV).The company recommended a final dividend of INR 11/share.
At a CMP of INR 4302, Persistent is currently trading at a PE of 37.2x to its FY24 EPS of INR 115.9. We believe Persistent Systems has a resilient business structure from a long-term perspective and multiple long-term contracts with the world’s leading brands.