![]() From a risk mitigation perspective, PSYS has the lowest revenue share in Europe and it has among the lowest T10 client concentration vs. PSYS' profit is expected to increase by 85% over FY22-25E, supported by continued client mining (USD 5mn+ logos doubled in the last two years) and increase in deal size (net-new deal duration increased from 1.2 years to 1.7 years over the last two years). Despite there being scope for operational improvement (upside risk to estimate), PSYS' margin defence over the past year has been better than peers importantly, incremental supply-side factors will be favourable (attrition trending lower). Margin improved sequentially despite a wage hike impact, driven by lower sub-con, higher offshore mix & offshore realisation, higher tech vertical margin, and SG&A leverage. Revenue came in at USD 256mn, +5.8% QoQ (including 1% inorganic) and 40.2% YoY, crossing the USD 1bn+ quarterly annualised revenue threshold. Persistent Systems: Persistent Systems (PSYS) posted slightly better-than-estimated Q2FY23 numbers and maintained its strong deal booking track record. ![]() Key positives include (1) deal bookings, which were at an all-time highboth renewals and net-new TCV, which provides adequate growth visibility (9MFY23 net-new ACV ~55% of revenue-rate) and positive commentary on Q4 order bookings (2) focus on larger deals with annuity and progress. ![]() Persistent Systems: Persistent Systems (PSYS) posted an in-line revenue and a slightly better operating performance. Maintain ADD on LTTS, with a TP of INR 3,600, based on 26x Sep-24E EPS (28x earlier). We expect low-teen organic growth and see increased volatility ahead and lower return metrics as LTTS consolidates SWC. While FY23E revenue growth guidance was cut to 15% CC (from 15.5-16.5% CC), the medium-term outlook was maintained at USD 1.5bn revenue run rate by FY25E (implying 3.4% CQGR post-SWC consolidation in Q1FY24E). The key strategic imperatives for the company are now integration of Smart World & Communication (SWC) acquisition, which can increase its deal pipeline in the telecom & hi-tech vertical. Key positives include (1) five deals of USD 10mn+ TCV booked in Q3 as compared to eight deals in H1FY23 (2) traction in the transportation vertical, also supplemented by empanelment from Airbus as a strategic partner, which will augment growth in the vertical and (3) recovery in the plant engineering vertical in Q4, aided by a strong pipeline. Revenue growth was flat sequentially, impacted by higher-than-expected furloughs in the plant engineering vertical and weakness in the telecom & hi-tech vertical. L&T Technology Services: L&T Technology Services (LTTS) posted weak revenue performance, resulting in a guidance cut, but an in-line operating performance.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |