Girish Pai

Nirmal Bang

Equity Bottom-Up

<p>4QFY21 Result Update</p>
<h2>Persistent Systems</h2>
<h3>Factors in our above consensus estimates; Downgrade to Accumulate</h3>
<p>4QFY21 results of Persistent Systems (PSL) were a tad better than expected on both revenue and margins front. Post 4QFY21, we maintain our higher-than-consensus estimates. We see PSL growing USD revenue at ~23%/~17% in FY22/FY23 and earnings at ~30% CAGR over FY21-FY23 (both unchanged since 3QFY21) – all organically. The 23% revenue growth estimate for FY22 implies revenue CQGR higher than…</p>

<p>3QFY21 Result Update</p>
<h2>Persistent Systems</h2>
<h3>Into the 20% plus growth league with rising margins</h3>
<p>We see Persistent Systems (PSL) accelerating its USD revenue at ~20% CAGR (probably a first in the Indian IT Services industry in this cycle) and earnings at ~31% CAGR over FY21-FY23. This is the result of initiatives on multiple fronts – sales, marketing, capability development, execution and partnerships - driven by efforts of a new team that has formed under the leadership of CEO Sandeep Kalra. The…</p>

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<p>2QFY21 Result Update</p>
<h2>Persistent Systems</h2>
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<h3>Marked shift in earnings trajectory on the cards</h3>
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<p>We see Persistent System’s (PSL) accelerating earnings at a ~25% CAGR over FY20-FY23 on the back of a ~13.5% INR revenue growth and an expansion in EBIT margins by ~450bps. Until 6-9 months back, PSL had been underperforming its peers due to a rather lackluster EPS growth of just ~4% over FY15-FY20 despite a ~13.5% INR revenue CAGR as its EBIT margin compressed by 650bps (entirely gross margin…</p>
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<p>1QFY21 Result Update</p>
<h2>Persistent Systems</h2>
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<p><strong>Springs a positive surprise</strong></p>
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<p>Persistent System’s (PSL) 3.1% QoQ revenue growth in 1QFY21 in USD terms was much better than the 7.2% decline we were anticipating. EBIT margin at 10.4% was also much better than our estimate of 7.5%. Our expectation of a cut back in discretionary small project spend in a recessionary environment in developed markets did not come true in the current quarter for PSL. Its 3.1% QoQ growth was driven by the IP stream which…</p>
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India

Persistent Systems Limited offers outsourced software product development. The Company offer services that include testing, support, and professional services.

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