Persistent Systems - With Long Term

BSE Index Analysis, Securties , Standard Experts

Persistent Systems :

Q4 In Line With Long Term IP-led Strategy...... 

Reco : Buy   

Cmp : 348   

Target : 382

Q4 highlights: Q4FY12 USD revenue was up 5% QoQ, ahead of our expectation of 2.5%. Revenue beat was largely due to higher IP^-led revenue at USD 7 mn (our estimate: USD 5 mn). Flat volume growth QoQ was a disappointment given it follows a weak Q3, which saw QoQ decline of 1%. EBITDA and PAT were higher than our estimates on lower employee costs (one-time reversal of incentives) and G&A cost rationalization.

IP focus paying-off: Growth in IP revenue (12% of Q4 revenue vs.  9% in Q3) was led by USD 1 mn of inorganic revenue and in-house IP ramp up. Strong performance seen in Top-10 accounts, up 6% QoQ in USD terms. Management expects momentum to continue with its IP initiatives gaining acceptance with its largest accounts.

Demand stable:

On overall demand, management indicated changing spending patterns into shorter duration and project-based contracts. Client investments in new technologies such as Cloud/Mobility/Collaboration/Analytics indicate PersistentⳠfocus on these four key areas along with IP is likely to deliver. 

Suggest : Must Buy

....**** on basis of BSE index