Result Analysis: Persistent Systems Limited (CMP: Rs.4440) Result Update: Q4FY23

Persistent Systems Ltd. is a software solution provider company catering to mainly three segments namely 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.) 33938.81
    Equity (Cr.) 76.43
    Face Value 10
    52 Wk. high/low 5131 / 3092
    BSE Code 533179 
    Book Value (Rs.) 461.17
    Sector IT-Software


    Key Ratios
    Debt-equity: 0.11
    ROCE (%): 26.38
    ROE (%): 22.40
    TTM EPS: 116.77
    P/BV: 9.63
    TTM P/E: 38.03

    Result Highlights:

    • Persistent Systems reported revenue increase of 3.9% on sequential basis to Rs.2,254 cr. and Net profits increase of 5.7% QoQ to Rs.252 cr. in the Q4FY23.

    • Despite the global macro challenges and several bank failures in the US and Europe, Persistent Systems achieved growth by consistently increasing its revenue in the key business segments.

    • EBIT of the company grew by 4% QoQ in while EBIT margin remained flat at 15.4% comparing to previous quarter.

    • Company’s all business segment showed positive growth; On quarterly basis, Healthcare & life-sciences business grew with 7% while BFSI and Software segments grew with 4.7% and 2% respectively.

    • Major markets i.e. North America and Europe showed growth in the quarter while India and Asia pacific showed degrowth.

    • Order book of Persistent Systems stands at $0.95 billion in Q4FY23 compared to $0.89 billion of Q3FY23.

    • Attrition rate dropped to 19.8% vs 21.6% of previous quarter, co. added 291 employees during Q4 taking total headcount to 22,889.

    • Board of the company approved a final dividend of Rs.12/share and a special dividend of Rs.10/share.

    Financial Performance:

    Shareholding Pattern:

    Particulars (In %) Q4FY23 Q4FY22
    Promoters Group 31.26 31.26
    FIIs 22.33 21.53
    DIIs 27.61 26.76
    Public 18.06 19.66
    Others 0.74 0.79

    Management Commentary:

    Commenting on March quarter results, Sandeep Kalra, CEO and MD said, “Fiscal year 2023 was momentous for Persistent as we achieved several key milestones including attaining $1 billion in annual revenue and inclusion in three key indices of the National Stock Exchange of India including the Nifty IT index. As we move to the next phase of growth, we will continue to strengthen our partner ecosystem, maintain operational rigour, and deepen our capabilities to scale our digital engineering expertise and drive business value for our clients.”


    Persistent Systems reported broadly in-lined results in Q4FY23 results with revenue increase of 3.9% QoQ and Net profit increase of 5.7% QoQ. EBIT Margins of the company remained flat compared to previous quarter, however the management of the company expects margin improvement by 200-300 bps over next 2-3 years. The demand trend looks promising for the company on the back of healthy strong order book and strong deal pipeline. But the overall IT industry still faces short term uncertainties due to the recession fears in the US and Europe. Hence, we remain neutral on the stock.


    Particulars (In Rs. Cr.) Q4FY23 Q3FY23 Q4FY22 QoQ% YoY% FY23 FY22 YoY%
    Revenue from Operations 2,254 2,169 1,638 3.9% 37.6% 8,351 5,711 46.2%
    Other Income 9 33 42 -73.1% -79.0% 71 144 -50.9%
    Total Income 2,263 2,202 1,680 2.8% 34.7% 8,421 5,855 43.8%
    Employee Benefit Expenses 1,346 1,275 1,007 5.6% 33.7% 4,970 3,459 43.7%
    Employee benefit Expenses as % of Sales 59.7% 58.8% 61.5% 90 bps -180 bps 59.51% 60.58% -180 bps
    Cost of Professionals 232 286 214 -18.8% 8.6% 1043 797 30.7%
    Depreciation & Amortisation Expense 70 68 51 2.0% 36.4% 272 166 63.8%
    Other Expense 259 206 135 25.8% 91.6% 819 496 65.2%
    EBIT 347 333 230 4.0% 50.7% 1247 792 57.4%
    EBIT Margin 15.4% 15.4% 14.0% 130 bps 14.9% 13.9% 770 bps
    Profit After Tax (PAT) 252 238 201 5.7% 25.1% 921 690 33.4%
    PATM (%) 11.2% 11.0% 12.3% 20 bps -110 bps 11.03% 12.09% -880 bps
    EPS (in Rs.) 33.65 31.9 26.3 5.5% 27.9% 123.73 90.34 37.0%


    Segment Revenue (In Rs. Cr.) Q4FY23 Q3FY23 Q4FY22 QoQ% YoY% FY23 FY22 YoY%
    BFSI 729 696 532 4.7% 37.0% 2,723 1,806 50.8%
    Healthcare & Life Sciences 444 414 337 7.2% 31.6% 1,616 1,184 36.5%
    Software, Hi-Tech and Emerging Industries 1,082 1,059 769 2.1% 40.7% 4,011 2,720 47.5%


    Segment Revenue Mix % Q4FY23 Q3FY23 Q4FY22 QoQ YoY FY23 FY22 YoY
    BFSI 32% 32% 32% 30 bps -20 bps 33% 32% 100 bps
    Healthcare & Life Sciences 20% 19% 21% 60 bps -90bps 19% 21% -140 bps
    Software, Hi-Tech and Emerging Industries 48% 49% 47% -90 bps 110 bps 48% 48% 40 bps


    Geography Revenue % Q4FY23 Q3FY23 Q4FY22 QoQ YoY FY23 FY22 YoY
    North America 77.9% 77.1% 78.6% 80 bps -70 bps 78.0% 78.8% -80 bps
    Europe 10.3% 9.0% 8.3% 130 bps 20 bps 9.0% 8.7% 30 bps
    India 10.0% 12.3% 11.5% -230 bps -150 bps 11.3% 10.6% 70 bps
    Rest of the World 1.8% 1.6% 1.6% 20 bps 20 bps 1.7% 1.9% -20 bps
    Source: Company website, EWL Research

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