Prabhudas Lilladher has given Buy recommendation for Persistent Systems with a target price of Rs. 3954 in its research report issued on Oct 01, 2021
Prabhudas Lilladher’s research report on Persistent Systems
Persistent’s acquisition of SCI and its affiliate, Fusion 360, serves as the foundation for scaling up the newly announced Payment Business Unit given – 1) SCI’s deep domain capabilities specializing in Payment solutions and Fusion 360’s expertise in servicing leading Payment platforms including IBM’s Financial Transaction Manager (FTM), 2) SCI provides inroads to 10 (most within top 20) leading banks in North America, 3) presence in Charlotte, North Carolina, one of the largest US banking hubs, 4) opens up cross-selling opportunities and 5) complements Persistent’s work of taking FTM to hybrid cloud for their largest client. Payments has become strategic growth area not only for Banking clients, but payments deliver foundational functionality across all industries, as it accelerates the adoption of digital to improve customer experience.
Our EPS estimates increased by 5.9%/4.9% led by increase in revenue estimates by 5.3%5.4% for FY23/24E year. We arrive at DCF based TP of INR 3954 (earlier: 3603). Persistent is currently trading at 36x/34x on FY23/24E earnings of INR 104.5/110.1 with Revenue/EPS CAGR of 20.2%/25.0% over FY21-24E .