Emkay Global Financial has given Buy recommendation for Persistent Systems with a target price of Rs. 3950 in its research report issued on Oct 21, 2022

Emkay Global Financial’ research report on Persistent Systems

PSYS reported better-than-expected operating performance in Q2. Revenue growth was broad-based across Software, Hi-tech & Emerging industries (8.3% QoQ; ex-top client 18.3%), BFSI (3.0%), and Healthcare & Life Sciences (4.7%). Management highlighted that client-focus has shifted towards cost optimization projects, given the prevailing uncertain macro conditions; this augurs well for large-deal opportunities. The company has not seen any material delay in decision-making so far, but remains watchful of the next quarter, given it being a short quarter. Order booking remained strong, with TCV of USD368mn (1.4x book-to-bill). The Services business has posted a 9.5% CQGR in the last eight quarters, and Management remains confident about sustaining the growth momentum on the back of continued strong demand, robust deal intake, healthy deal pipeline, new logo additions, and steady progress in client mining. IP revenue grew strongly in Q2 and partly explains the margin beat. We raise our EPS by 3.9%-5.1% for FY23E-25E, factoring-in the Q2 beat.


We retain BUY with TP of Rs3,950 at 25x Sep-24E EPS (earlier Rs3,800), considering the strong execution, favorable industry tailwinds, and strong earnings trajectory (24.4% EPS CAGR over FY22-25E).

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