Revenue in rupee terms stood at Rs.
We have cut our estimates for FY25/FY26E by 8%/10% owing to lower margins estimates.
The 10% correction in the stock post Q4 numbers, makes risk reward favourable.
We maintain BUY on the stock with a revised TP of Rs.
Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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Sharekhan's research report on Aditya Birla Fashion & Retail
Persistent Systems Limited (PSL) reported revenue of $310.9 million, up 3.4% in constant currency (CC) terms, in line with our estimate of $311.2 million, led by Healthcare and Lifesciences and BFSI vertical, which was partially offset by weakness in Software, Hi-tech, and Emerging industries. Revenue in rupee terms stood at Rs. 2,590.5 crore, up 3.7% q-o-q and 14.9% y-o-y. EBIT margin was flat at 14.5% but missed our estimate of 14.8%, owing to ramp up of a large vendor consolidation deal, which included a one-time transition cost along with lower utilisation, higher subcontractor cost, and higher travel cost, which was compensated by a reduction in earnout liability concerning one of the acquisitions.
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Outlook
PSL has been consistently delivering industry-leading performance since the past several quarters and is well placed to lead the growth trajectory in FY25/FY26, given the strong order book, consistent addition of new logos, and strong capabilities. We expect Sales/PAT CAGR at 17.8%/20.6% over FY24- FY26E. Though management has reaffirmed its commitment towards improving EBIT margin by 200-300 bps over the next two to three years, its commentary on maintaining EBIT margin at the current level for FY25 owing to investments in building sales and marketing capacity as well as building next-gen technology assets, including the AI domain is likely to place upper bounds on the profitability. We have cut our estimates for FY25/FY26E by 8%/10% owing to lower margins estimates. The 10% correction in the stock post Q4 numbers, makes risk reward favourable. We maintain BUY on the stock with a revised TP of Rs. 4,150. At the CMP, the stock trades at 39.8/32.1x its FY25/FY26E EPS.
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