Buy Persistent Systems, target price Rs 2200: Emkay Global

has buy call on with a target price of Rs 2200. The current market price of Persistent Systems Ltd. is Rs 1924.35.

Persistent Systems Ltd., incorporated in the year 1990, is a Mid Cap company (having a market cap of Rs 14758.81 Crore) operating in IT Software sector.

Financials
For the quarter ended 31-12-2020, the company reported a Consolidated Total Income of Rs 1105.41 Crore, up 7.92 % from last quarter Total Income of Rs 1024.24 Crore and up 15.45 % from last year same quarter Total Income of Rs 957.50 Crore. Company reported net profit after tax of Rs 120.92 Crore in latest quarter.

Investment Rationale
The brokerage raises earnings estimates by 9.8%/10.8% for FY22/FY23, considering strong revenue growth momentum and low amortization charges (430bps expansion over FY20-23E). It retains Buy with a revised TP of Rs2,200 at 24x FY23E earnings (earlier 22x), based on a ~27% earnings CAGR over FY21-23E and improving medium-term growth prospects.

Promoter/FII Holdings
Promoters held 31.5 per cent stake in the company as of June 30, 2020, while FIIs held 19.2 per cent, DIIs 27.2 per cent and public and others 22.1 per cent.