Unicon Investment is bullish on Persistent Systems and has recommended accumulate rating on the stock with a target of Rs 381 in its October 18, 2011 research report.
“Persistent Systems Ltd. (PSL) has delivered a decent performance for the second quarter of the financial year. For the quarter, they continued to see growth in their cloud and mobility practice as customers continued to look for cost effective, time-to-time market solutions.”
“PSL reported top-line and bottom-line numbers which were slightly below our estimates. Revenue at INR 2381 mn was up 27% and 6% on a YoY and a QoQ basis respectively. EBITDA for the quarter stood at INR 446 mn, up 4% from the same quarter in the previous year. Reported PAT stood at 324 mn for the quarter, an increase of 18% QoQ. A pay hike of ~9% in the month of July increased the employee costs and affected the EBITDA margins by -429bps YoY. The PAT margins also dropped by -555bps YoY, but on a QoQ basis the EBITDA and PAT margins have seen an improvement of 135 bps and 129 bps respectively. PSL added 37 new customers for the quarter. The clients billed for the current quarter stood at 253. Moving forward they see growth potential in the European market through strategic alliances and partnerships. During the quarter PSL acquired the French software business from Agilent Technologies. PSL also announced a strategic services partnership with Dassault Systemes in the PLM space. PSL has added 632 new graduates from an engineering background this quarter.”
“The global environment and specifically the situation in the US (as it contributes to 82% of revenue) will have a significant impact on the top and bottom line of the company in the quarters ahead. The growth numbers from the US suggest that they may not be headed towards a recession. The company has so far been able to substitute long term deals with shorter flexible deals due to their innovation and cost effective pricing model. Due to the deprecation of the INR in the quarter, the company has seen a benefit of 1.9% to the EBITDA. PSL has a forex hedged position of USD 85.29 mn at USD 49.44 over 12 months. We recommend an ACCUMULATE on the stock with a potential upside of 18%. At CMP the stock is trading at P/E 10.3x FY12E, we maintain our price target of INR 381,” says Unicon Investment research report.
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“Persistent Systems Ltd. (PSL) has delivered a decent performance for the second quarter of the financial year. For the quarter, they continued to see growth in their cloud and mobility practice as customers continued to look for cost effective, time-to-time market solutions.”
“PSL reported top-line and bottom-line numbers which were slightly below our estimates. Revenue at INR 2381 mn was up 27% and 6% on a YoY and a QoQ basis respectively. EBITDA for the quarter stood at INR 446 mn, up 4% from the same quarter in the previous year. Reported PAT stood at 324 mn for the quarter, an increase of 18% QoQ. A pay hike of ~9% in the month of July increased the employee costs and affected the EBITDA margins by -429bps YoY. The PAT margins also dropped by -555bps YoY, but on a QoQ basis the EBITDA and PAT margins have seen an improvement of 135 bps and 129 bps respectively. PSL added 37 new customers for the quarter. The clients billed for the current quarter stood at 253. Moving forward they see growth potential in the European market through strategic alliances and partnerships. During the quarter PSL acquired the French software business from Agilent Technologies. PSL also announced a strategic services partnership with Dassault Systemes in the PLM space. PSL has added 632 new graduates from an engineering background this quarter.”
“The global environment and specifically the situation in the US (as it contributes to 82% of revenue) will have a significant impact on the top and bottom line of the company in the quarters ahead. The growth numbers from the US suggest that they may not be headed towards a recession. The company has so far been able to substitute long term deals with shorter flexible deals due to their innovation and cost effective pricing model. Due to the deprecation of the INR in the quarter, the company has seen a benefit of 1.9% to the EBITDA. PSL has a forex hedged position of USD 85.29 mn at USD 49.44 over 12 months. We recommend an ACCUMULATE on the stock with a potential upside of 18%. At CMP the stock is trading at P/E 10.3x FY12E, we maintain our price target of INR 381,” says Unicon Investment research report.
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