Persistent Systems Q1 Review - Results Beat; Margin Expansion Story Pushed Further: Dolat Capital

NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Dolat Capital Report.Persistent Systems Ltd. posted constant currency revenue of $328.2 million, up 5.6% QoQ (our estimate: +5%), driven by ramp-up in healthcare/banking, financial services and insurance (up 16.5%/5.9% QoQ). Operating profit margin stood at 14%, down 50 bps QoQ (our estimate: 13.7%) and included one-time gain from earnout reversal (+60 bps) and change in amortisation (+40bps).Persistent Systems' management pointed out that it continues to expect healthy growth momentum backed by robust new annual contract value wins while expect margins to remain in-line with FY24 (13.9%). We believe that aspiration to expand operating profit margin has always been a challenging goal and was baked conservatively in our estimates versus guidance/consensus. We raise our FY25/FY26E EPS estimate by (3.4%/2.5%) backed by improved deal wins and strong growth. Nevertheless, we believe stretched valuations (over 50x on 12m forward basis) and risk to significant cut in consensus est. (factoring 26% EPS CAGR Vs our est. of 18% for FY24-26E) make it expensive. Thus, maintain ‘Sell’ rating with target price of Rs 3,320 (valued at 33 times FY26E)..Click on the attachment to read the full report:.Persistent Systems Q1 Results: Profit Falls 5.7%, Meets Estimates.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Persistent Systems Q1 Review - Results Beat; Margin Expansion Story Pushed Further: Dolat Capital

The brokerage believes stretched valuations and risk to significant cut in consensus estiamte make it expensive.

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Persistent Systems Q1 Review - Results Beat; Margin Expansion Story Pushed Further: Dolat Capital

The brokerage believes stretched valuations and risk to significant cut in consensus estiamte make it expensive.

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