ICICI Direct recommended hold rating on Persistent Systems with a target price of Rs 605 in its research report dated December 13, 2018.
ICICI Direct's research report on Persistent Systems
We attended the Persistent Systems (PSL) analyst meet wherein the company cited its focus areas and detailed strategy on lifesciences & healthcare and BFSI vertical. In an important announcement, the company said the Chairman & MD (CMD) position would be split. Dr Anand Deshpande, Persistent founder and current Chairman & MD would continue to be the Chairman of the company. An external candidate would be recruited for the post of MD and would be more of a sales oriented person. The process is expected to be completed by Q3FY19 end. An inclination towards a sales oriented candidate as MD indicates a step by the company in the direction to bring growth back on track. Incidentally, the company saw a significant revenue miss in the recently concluded quarter.
Outlook
Improved revenue execution in the wake of focus on specific industry segments and a new MD on the table has to be watched for a case of re-rating. Hence, we keep our estimates intact and maintain our HOLD rating on the stock with a target price of Rs 605 per share.
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