Stock to Watch- Persistent Systems

Persistent Systems Limited, a Small Cap Company which turned into a Mid Cap Company and is on the way to become a Large Cap Company. The company has released its Quarterly Results for Q1FY22 and has presented some impressive figures as well. Let’s discuss how the company performed in the first quarter of FY22 along with the reasons to keep this stock on the radar.

Introduction: Persistent System Share Price

Persistent Systems, a software engineering company announced its Quarterly Results for Q1FY22 on Tuesday 27th July 2021. The company has a significant journey from a small-cap to a mid-cap company. The company has reported some phenomenal figures in its Q1FY22 result quarterly which makes it an interesting company to keep an eye on. Let’s analyze the results and prospects of the company in brief.

Q1FY22 Result: Persistent System Annual Report

• The Revenue Growth of the company has grown by 10.5% QoQ at Rs. 1,230 Cr. as of 30th June 2021.

• The company expects revenue growth in the range of 23%-24% in FY22.

• The Earnings Before Interest and Tax (EBIT) has grown by 13.7% sequentially to Rs. 166 Cr. in the quarter ended 30th June 2021.

• The Growth in Revenue and EBIT by healthy positive difference shows the increase in the efficiency of the company.

• The EBIT Margin of the company has also increased sequentially from 13.2% in Q4FY21 to 13.5% in Q1FY22.

• The Net Profit of the company has grown by 9.8% QoQ as of 30th June 2021.

• The Net Profit of the company is Rs. 151 Cr. in the Q1FY22.

• The Revenue Mix of the company as of 30th June 2021 is in the US (79%), India (9.8%), Europe (9.5%), and the Rest of the World (1.7%).

• The dependency on the US from a revenue point of view is quite high.

• The Total Deal Wins of the company in Q1FY22 is $244.8 Million. Out of these $147.7 Million contracts are the new contracts which account for 60.3% of the total deal wins. This % was 55.9% in the previous quarter.

• The company has noted some improvement in efficiency as the cost like administration, etc. has come down to 17% over the last couple of years.

• The Employee Attrition Rate of the company has increased from 11.7% in Q4FY21 to 16.6% in Q1FY22 which is not a positive sign for the company.

Conclusions: Persistent System Review

The IT Sector has remained a very dynamic sector in the last 1-2 years and there are some notable changes taking place. Here, Persistent Systems has performed exceptionally well in the last 1 year by delivering a marvelous return of above 220% in the last one year. The company is performing well and has shown remarkable figures in the first quarter of FY22. Looking at the performance of the company this stock could be on one’s radar, but an investor should do proper research and study before making an investment decision. This is not direct advice to invest in this stock and hence one should consult a financial advisor before making any move.

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