Sharekhan has given Buy recommendation for Persistent Systems with a target price of Rs. 4160 in its research report issued on Sep 14, 2021
Sharekhan’s research report on Persistent Systems
With ~60% of revenues arising from digital engineering, PSL is well-poised to capture opportunities from rising spends on digital engineering, the market for which is likely to click a 16% CAGR over 2020-2025. We expect USD revenue/earnings to clock report a CAGR of 20%/30% over FY2021-FY2024E, led by broad-based demand, robust deal TCVs, healthy deal pipeline and steady addition of new logos. Wage revisions would affect margins by 250-275 bps q-o-q in Q2FY2022, but the net effect is likely to be restricted to 75-100 bps, given operating leverage and lower visa costs.
We retain a Buy on Persistent Systems with a revised PT of Rs. 4,160, on expectations of industry-leading organic revenue growth, healthy cash generation, and M&A activity to enhance capabilities.