Emkay Global Financial has given Buy recommendation for Persistent Systems with a target price of Rs. 3700 in its research report issued on Sep 13, 2021
Emkay Global Financial’s report on Persistent Systems
PSYS has seen a 5.6% CQGR in services revenue since Q1FY20, despite Covid-19 disruptions. It indicates healthy demand for the company’s offerings and early results of leadership augmentation, recalibrated sales incentive structure and strong execution. PSYS is seeing broad-based healthy demand and expects demand to remain strong in the next 3-5 years. It is confident of sustaining the revenue growth momentum on the back of broad-based demand, robust deal intake, healthy deal pipeline and new logo additions. PSYS is focusing on increasing the share of revenues from the Europe region in the next few years, organically and inorganically. It expects revenues from Europe to rise to 15-18% of total revenue in the next 3-5 years from 9.5% currently.
Among our coverage companies, we expect PSYS to lead the pack in terms of organic revenue growth. A strong earnings trajectory (27.4% EPS CAGR over FY21-24E) and healthy cash generation should help to sustain higher valuations. Retain Buy with a TP (Sep’22E) of Rs3,700 at 33x Sep’23E EPS.