Prabhudas Lilladher has given Buy recommendation for Persistent Systems with a target price of Rs. 1727 in its research report issued on Feb 01, 2021
Prabhudas Lilladher’s research report on Persistent Systems
Persistent reported strong beat of 290bps in revenue growth with revenue at $146.15 mn, +7.4% QoQ USD. Growth was led by sustained strong performances in Services revenues (+5% QoQ USD) and strong recovery in IP led revenues (+20.0% QoQ USD) supported by seasonally strong quarter for IP business. Revenue growth momentum will continue supported by one of the heathiest TCV of 302$ mn and ACV of 256$mn. EBIT margin came at 12.7%, +60 bps QoQ and management guided that there are cost optimization levers and revenue growth will provide scope for margins to increase further. We expect stable margin performance in FY22/23E EBIT margin at 12%.
We continue to value Persistent on 21X FY23 earnings to arrive at changed TP of INR 1727 (earlier: 1526). Persistent is currently trading at 21.6x/18.5x on FY22/23 earnings of INR 70/82. Maintain Buy.