Prabhudas Lilladher is bullish on Persistent Systems and has recommended buy rating on the stock with a target of Rs 440 in its October 17, 2011 research report.
“Persistent’s Q2FY12 results were in line with our expectation, but touch below consensus. Revenue grew 6.4% QoQ to Rs2.38bn (PLe: Rs2.38bn Cons: Rs2.40bn) and 3.1% QoQ in USD terms to $51.5m (PLe: $52m). EBITDA margins expanded by 112bps to 19% (PLe: 17.6%, Cons: 17.5%) due to currency depreciation, despite a wage hike of 9%. EPS grew by 17.6% QoQ to Rs8.06 (PLe: Rs6.02, Cons: Rs6.75) due to forex gain.”
“The management cited caution on the current guidance of USD revenue of ~$220m (29% YoY growth), with flat PAT. We believe that Persistent would find it tough to meet targets despite a good deal pipeline. We lower our volume growth estimates by 400bps to 21% for FY12 and pricing by 200bps to 2%. We also revise our currency estimates for FY12 and FY13. Consequently, we revise our rupee revenue estimates by -0.5% and -2.9% and EPS estimates by 0.8% and -6.7% for FY12 and FY13, respectively.”
“We remain optimistic about the volume momentum and realization improvement aiding cost absorption, from unutilized margin levers in H2FY12. We reiterate ‘BUY’ rating, with revised TP to Rs 440, 13x (from 14x) FY13e earnings estimates,” says Prabhudas Lilladher research report.
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“Persistent’s Q2FY12 results were in line with our expectation, but touch below consensus. Revenue grew 6.4% QoQ to Rs2.38bn (PLe: Rs2.38bn Cons: Rs2.40bn) and 3.1% QoQ in USD terms to $51.5m (PLe: $52m). EBITDA margins expanded by 112bps to 19% (PLe: 17.6%, Cons: 17.5%) due to currency depreciation, despite a wage hike of 9%. EPS grew by 17.6% QoQ to Rs8.06 (PLe: Rs6.02, Cons: Rs6.75) due to forex gain.”
“The management cited caution on the current guidance of USD revenue of ~$220m (29% YoY growth), with flat PAT. We believe that Persistent would find it tough to meet targets despite a good deal pipeline. We lower our volume growth estimates by 400bps to 21% for FY12 and pricing by 200bps to 2%. We also revise our currency estimates for FY12 and FY13. Consequently, we revise our rupee revenue estimates by -0.5% and -2.9% and EPS estimates by 0.8% and -6.7% for FY12 and FY13, respectively.”
“We remain optimistic about the volume momentum and realization improvement aiding cost absorption, from unutilized margin levers in H2FY12. We reiterate ‘BUY’ rating, with revised TP to Rs 440, 13x (from 14x) FY13e earnings estimates,” says Prabhudas Lilladher research report.
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