Persistent Systems Q3FY18: Healthy Performance Aided By IP Revenue; Buy | Persistent Systems Q3FY18 Results | IndiaNotes.com
Outlook & Valuation
We continue to believe that Persistent’s long-term strategic business direction remains on track, with increasing revenue from Digital Business and Enterprise Services, led by key services including IoT. Its increasing focus on IP and non-linear revenue through the IBM partnership along with allied deal wins, and reducing focus on linear, effort-based revenue drives our underlying confidence on quality of revenue and long-term margin sustainability and improvement. We believe from a structural perspective, higher IP revenue is the biggest margin lever for Persistent.
We upgrade FY18/FY19E EPS by 6-14% after the beat in 3QFY18. Rolling over our estimates to FY20E, we upgrade our recommendation on the stock to BUY from HOLD, with a revised Target Price of Rs 920 (from Rs 705 earlier).
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About Reliance Securities
Reliance Securities, the broking arm of Reliance Capital, is one of the India’s leading retail broking houses, providing customers with access to equities, derivatives, currency, IPOs, mutual funds, bonds, and corporate FDs amongst others. The large array of financial offerings helps customers fulfilling their investment objectives on one platform. Focus on timely & error-free execution represents its core strength. Their best in class research offerings, high degree of compliance with stock exchange regulations, ethical business standards, & strong risk management capabilities; Reliance Securities positions itself amongst strong & innovative brands in the financial services space.
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