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Buy Persistent Systems: target of Rs 4160: Sharekhan

Buy Persistent Systems: target of Rs 4160: Sharekhan
September 15
10:24 2021

Sharekhan is bullish on Persistent Systems has recommended buy rating on the stock with a target price of Rs 4160 in its research report dated September 14, 2021.

Broker Research

September 15, 2021 / 10:13 AM IST

“India’s specialty chemicals industry is a decadal growth opportunity and it is still not too late to participate in the value creation process. We prefer CRAMS/CSM players Navin Fluorine (Navin) and PI Industries (PI) as they provide long-term earnings visibility. We also like UPL due to robust growth outlook and reducing debt concerns and SRF due to rising contribution from the chemicals business,” JM Financial research report.

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Sharekhan’s research report on Persistent Systems

With ~60% of revenues arising from digital engineering, PSL is well-poised to capture opportunities from rising spends on digital engineering, the market for which is likely to click a 16% CAGR over 2020-2025. We expect USD revenue/earnings to clock report a CAGR of 20%/30% over FY2021-FY2024E, led by broad-based demand, robust deal TCVs, healthy deal pipeline and steady addition of new logos. Wage revisions would affect margins by 250-275 bps q-o-q in Q2FY2022, but the net effect is likely to be restricted to 75-100 bps, given operating leverage and lower visa costs.

Outlook

We retain a Buy on Persistent Systems with a revised PT of Rs. 4,160, on expectations of industry-leading organic revenue growth, healthy cash generation, and M&A activity to enhance capabilities.

For all recommendations report, click here

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