Result Analysis: Persistent Systems Limited (CMP: Rs.3961) Result Update: Q3FY23

Persistent Systems Ltd. is a software solution provider company catering to mainly three segments: Technology Services, Banking, Financial Services and Insurance (BFSI), and Healthcare & Life Sciences. Its solutions include cloud life cycle management, Internet of Things, unified endpoint management, endpoint detection and response, and Big Data analytics. The company also offers product engineering services, platform-based cloud solutions, and Internet Protocol-based products. It derives revenue from North America, Europe and Rest of the World.

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    Stock Details
    Market Cap. (Cr.) 30275.76
    Equity (Cr.) 76.43
    Face Value 10
    52 Wk. high/low 4950 / 3092
    BSE Code 533179 
    Book Value (Rs.) 461.17
    Sector IT-Software
    Key Ratios
    Debt-equity: 0.11
    ROCE (%): 26.38
    ROE (%): 22.4
    TTM EPS: 105.86
    P/BV: 8.6
    TTM P/E: 37.42

    Result Highlights:

    • Revenue of the company increased by 45.43% YoY and 5.89% QoQ to Rs.2,169.37 as against the broader estimates of Rs.2,161 cr.
    • Operating profit margin for the quarter increased by 78 bps QoQ and 140 bps YoY to 15.36%. compared to the estimates of 14.6%.
    • Net Profit increased by 8.15% QoQ and 34.90% YoY(despite current global headwinds) to Rs.237.95 cr. compared to the estimates of Rs.245 cr.
    • Among industries BFSI, Healthcare & Life Sciences, and Software, Hi-Tech & Emerging Industries showed growth of 4.86%, 7.18% and 6.07% respectively on QoQ basis.
    • Across geographies, America showed a de-growth of 150 bps while Europe, and India grew by 70 bps and 80 bps respectively on QoQ basis.
    • TCV bookings of the company stand at $440mn that grew by 20% sequentially.
    • Attrition rate dropped significantly from 23.7% in September quarter’22 to 21.6% in this quarter.
    • Company added 122 employees in the quarter, total headcount is at 22,598.
    • Persistent announced dividend of Rs.28 per share.
    • Company saw a decline in revenue contribution from top clients be it Top 1, Top 5, Top 10, and Top 20

    Financial Performance:


    Shareholding Pattern:

    Particulars %
    Promoters & Promoter Group 31.26
    FIIs 21.43
    DIIs 25.93
    Public 20.55
    Others 0.83

    Managerial Commentary:

    • Sandeep Kalra, Chief Executive Officer and Executive Director of the company said, “We are delighted to announce the 11th sequential quarter of revenue growth, fueled by our continued investments in innovative technologies and our differentiated Digital Engineering expertise. In this dynamic macro-economic environment, we are closely collaborating with our clients and partner ecosystem to create competitive advantage and drive business value. As a result, we won several large deals across industries and service lines, driving 20% sequential growth in total contract value (TCV) bookings.


    Persistent Systems Ltd. showed good performance in Q3FY23 despite seasonal and macro headwinds. Company has maintained its growth momentum in all segments like BFSI, Healthcare & Life Sciences, and Software, Hi-Tech & Emerging Industries. But the revenue was impacted by 1.5% on account of furloughs. The downward pull in profit growth guidance shows the near term threat prevailing in the macro environment. The company reported EPS of Rs.90.08 for 9MFY23 which is higher from the 9MFY22 EPS of Rs.64.04. Keeping these in mind, we expect the EPS for FY23 to remain at Rs.120.10 at the PE of 32.98x for the CMP of Rs.3961.



    Particulars (In Rs. Cr.) Q3FY23 Q2FY23 Q3FY22      QoQ %          YoY%
    Revenue from Operations 2169.37 2048.64 1491.72 5.89% 45.43%
    Other Income 32.76 8.06 30.66 306.67% 6.83%
    Total Income 2202.13 2056.70 1522.38 7.07% 44.65%
    Employee Benefit Expenses 1561.61 1500.92 1113.46 4.04% 40.25%
    Employee benefit Expenses as % of Sales 71.98% 73.26% 74.64% -128bps -266bps
    EBIT 333.20 298.66 208.30 11.56% 59.96%
    EBIT Margin 15.36% 14.58% 13.96% 78bps 140bps
    Profit After Tax 237.95 220.01 176.40 8.15% 34.90%
    PATM (%) 10.97% 10.74% 11.82% 23bps -85bps
    EPS (in Rs.) 31.9 29.61 23.08 7.73% 38.21%
    Segment Revenue Q3FY23 Q2FY23 Q3FY22 QoQ % YoY% Segment %
    Banking, Financial Services and Insurance 696.04 663.61 480.85 4.89% 44.75% 32.08%
    Healthcare & Life Sciences 413.97 386.26 308.63 7.18% 34.13% 19.08%
    Software, Hi-Tech and Emerging Industries 1059.36 998.78 702.24 6.07% 50.85% 48.83%
    Total 2,169.37 2,048.64 1,491.72 5.89% 45.43% 100.00%


    Geography Revenue % Q3FY23 Q2FY23 Q3FY22      QoQ          YoY
    America 77.1% 78.6% 79.2% -150 bps -210 bps
    Europe 9.0% 8.3% 8.3% 70 bps 70 bps
    India 12.3% 11.5% 10.9% 80 bps 140 bps
    Rest of the World 1.6% 1.6% 1.6%
    Source: Company website, EWL Research

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