Persistent Systems is all set to report its December quarter results today. The company board would also consider paying interim dividend, if any. The IT major is expected to report over 30 per cent rise in year-on-year (YoY) profit on a 45 per cent jump in sales. Margin is expected to expand sequentially. Investors would watch out for commentary on average contract value (ACV). They will also focus on any commentary on Hitech, which has been an area of weakness across the industry and account for a good part of revenue mix for Persistent Systems.
Sharekhan expect Persistent Systems to report a 46 per cent YoY rise in sales at Rs 2,179 crore compared with Rs 1,492 crore in the corresponding quarter last year. Emkay Global sees sales for Persistent Systems rising 44.8 per cent (5.4 per cent QoQ) to Rs 2,160 crore. It expects expect 2.7 per cent QoQ dollar revenue growth for Persistent Systems, with cross-currency headwinds of 30 basis points.
Persistent is expected to report strong CC revenue growth of 4.4 per cent QoQ, with no material impact of cross currency, Sharekhan said.
Axis Securities sees Persistent Systems' December quarter profit at Rs 240 crore, up 36.40 per cent over Rs 176 crore in the same quarter last year. Sharekhan expect Persistent Systems to report a 40.90 per cent YoY surge in profit at Rs 248 crore. Emkay Global sees profit for Persistent Systems jumping 33.7 per cent YoY (7.2 per cent QoQ) to Rs 235.80 crore.
Emkay Global expects Ebitda margin for Persistent Systems to be at 18.1 per cent against 18 per cent in September and 16.8 per cent in the year-ago quarter. It expects EBIT margin to expand 20 basis points sequentially on account of rupee depreciation. Sharekhan sees December quarter margins at 18.2 per cent. EBIT margin may improve 28 bps QoQ, led by easing supply-side pressure and weaker rupee partially offset by lower utilisation due to higher furloughs, Sharekhan said.
Deal wins, attrition
Motilal Oswal Securities expect deal wins for Persistent Systems to remain strong in 3QFY23, even as average contract value (AC) number can be lower due to higher tenure cost take-out deals. This brokerage said that medium-term growth and margin outlook should be the key monitorables.
Nirmal Bang expects deal wins in excess of $350 million.
"Attrition has been improving QoQ and this trend is expected to continue as the company hiring was low in Q2FY23. Hiring may remain muted for Q3FY23 in view of the clients shifting towards cost optimisation deals where the company has less expertise as well as gradual build up of vendor consolidation where the company may be at a disadvantage again larger tier-1 players," it said.
Hitech has been an area of weakness across the industry and Nirmal Bang said investors will await commentary on how that will shape up in the coming quarters, considering that it is the vertical with the highest weight in the revenue mix.
Digital transformation deals and ramp up on new deal wins are key things to see, said Axis Securities.
Dividend, earnings call
In the case of Persistent Systems, the company had set record date for interim dividend as January 27, subject to the approval by the board of directors at its meeting to be held on Wednesday, January 18, 2023. This company will hold investor call on Thursday, January 19, at 5 pm IST.
"During this call, the management will comment on the financial results for the quarter and period ended December 31, 2022, as well as on the business outlook. Details of the investor/ analyst call will be published on the company’s website in due course," Persistent Systems said in a BSE filing.
Copyright©2023 Living Media India Limited. For reprint rights: Syndications Today