Creating niche by digital transformation…
Incorporated in 1990, Persistent Systems (Persistent) provides product engineering services, platform based solutions and IP-based software products to its customers. It operates in two key segments viz; Services (~79% of overall revenue in FY16) and IP Led (~21%). The services business is further bifurcated into ISVs (52%) and Enterprise (~26%).
View & Valuvation
Persistent’s improving business mix with focus on enterprise digital transformation and IoT coupled with its strong engineering capability and early adoption of SMAC technology lends confidence on sustainability of growth trajectory going forward. Further, its enhanced focus on IP business will not only drive earnings but also provide a strong competitive edge over peers. Hence, we expect revenue/PAT to grow at a CAGR of 16%/11% over FY16-19E. We initiate Persistent with a BUY rating with a TP of Rs709 at 14x FY19E EPS.
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