6 May 2020
4QFY20 Results Update | Sector: Technology
Persistent Systems
Estimate change
TP change
Rating change
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
Financials & Valuations (INR b)
Y/E Mar
2020 2021E
Sales
35.7
37.8
EBIT Margin (%)
9.2
9.5
PAT
3.4
3.5
EPS (INR)
44.4
45.5
EPS Gr. (%)
0.9
2.4
BV/Sh. (INR)
302.2 338.3
Ratios
RoE (%)
14.3
13.1
RoCE (%)
10.2
10.4
Payout (%)
27.0
17.6
Valuations
P/E (x)
11.4
11.1
P/BV (x)
1.7
1.5
EV/EBITDA (x)
5.9
4.1
Div Yield (%)
2.4
1.6
PSYS IN
38.6 / 0.5
740 / 420
-16/6/-2
65
CMP: INR505
TP: INR 730 (+45%)
Buy
Surprise on growth and margin; Cautiously optimistic outlook!
Steady progress on turnaround; Reiterate BUY
Despite the disruption due to COVID-19, Persistent’s strong performance
within the Services segment (~15%/11% in 4Q/FY20, YoY) reflects its steady
progress on turnaround. As the pandemic situation is expected to increase
the uptake of digital services, we expect Persistent’s portfolio to benefit.
High exposure to salesforce consulting and verticals such as Technology,
Healthcare, and BFSI gives us this confidence. Nevertheless, IP revenue
should continue to be an overhang. Historically, execution challenges and
volatility in the IP portfolio have led to inconsistency in the company’s
performance. However, the recent improvement witnessed in execution and
a higher focus on annuity revenue should address this issue to some extent.
A relatively higher share of dollar invoicing (v/s peers) cushions against a
further impact on already depressed margins.
We upgrade our EPS estimates over FY20–22E by 20–22%. While material
delay in clients’ discretionary spends is a monitorable risk, subdued
multiples offer adequate margin for safety.
76
2022E
42.4
12.0
4.6
60.6
33.4
387.3
15.3
13.1
16.5
8.3
1.3
2.7
2.0
Surprise on revenue and margin; Decline in IP-led revenue
Shareholding pattern (%)
As On
Promoter
DII
FII
Others
Mar-20 Dec-19 Mar-19
31.4
31.9
30.6
24.8
23.5
21.9
23.1
22.7
23.6
20.7
21.9
23.9
FII Includes depository receipts
In 4QFY20, revenue (USD) / EBIT (INR) / PAT increased 7%/-4%/-1% YoY v/s
our estimates of 6%/-19%/-13% YoY.
Technology Services Unit (TSU) reported strong growth of 4.2% QoQ despite
the disruption from COVID-19 during the quarter. Growth in this segment
was broad based across top clients and led by offerings such as salesforce
services/cloud/infrastructure.
However, overall revenue decline was attributed to sharp decline in the IP
segment (~24% QoQ). The issue of seasonality, in this case, was
compounded by the lockdown.
Across verticals, the IP decline was reflected in the Tech Companies &
Emerging vertical (-3.9% QoQ, ~50% of revenues). Revenue in BFSI and
Healthcare & Life Sciences (~50% of combined revenue) remained largely
stable.
Revenue from the top account fell sharply (-12% QoQ). While growth in the
top 2–5 clients came in strong at 5% QoQ, the top 6–10 accounts (-6% QoQ,
USD) remained an overhang on growth.
Even as the Americas and Europe reported a drop (-2% /-18% QoQ), RoW
delivered healthy growth (+16% QoQ).
The EBIT margin expanded ~50bp QoQ to ~9.2% (v/s 8% est.). Lower IP
royalty expense led to gross margin expansion (+70 bps). This was partially
offset by an increase in SG&A costs and a one-time provision for expected
credit loss.
Sudheer Guntupalli – Research analyst
(Sudheer.Guntupalli@MotilalOswal.com); +91225036 2749
Research analyst –Mohit Sharma
(Mohit.Sharma@MotilalOswal.com); +91226129 1531 /
Heenal Gada
(Heenal.Gada@MotilalOswal.com); +91225036 2654
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
 Motilal Oswal Financial Services
Persistent Systems
Cautiously optimistic commentary
The company is cautiously optimistic on performance in the coming quarters,
even as COVID-19-led uncertainty prevails. Management expects a near U
shaped recovery over the next few quarters.
Management hinted at a healthy deal pipeline, with good contribution across
channels (internal sales team and advisory firms such as ISG and Zinnov). The
company further indicated it was targeting new logos and receiving incremental
requests for business in existing accounts, driven by the COVID-19 disruption.
Within Services, all the verticals – BFSI, Healthcare & Life Sciences, and Tech –
are largely resilient. Even as spend on erstwhile legacy applications is expected
to face headwinds, management highlighted clients are pursuing spends in new
areas.
Due to the COVID-19 crisis, the company is witnessing a trend of delays in
certain deal ramp-ups as well as requests for price discounts and credit
extension. However, PSYS is very cautious in accommodating these requests and
does not expect any major impact due to the same.
Historically, execution challenges and volatility in the IP portfolio have led to
inconsistency in the company’s performance. However, we noticed steady
progress on the execution front post the management/strategy change.
This was evident in the consistent performance from the Services segment over
past few quarters, notwithstanding the COVID-19 disruption in 4Q. Additionally,
we expect a higher emphasis on annuity revenue to address the performance
consistency issue to an extent.
The company’s robust performance in 4Q (barring IP), healthy deal pipeline, and
cautiously optimistic outlook indicate the near term COVID-19 disruption would
not be as bad as we initially anticipated.
Over the medium term, Persistent should be a key beneficiary of the COVID-19-
led increase in uptake in digital services, given its high exposure to salesforce
consulting and verticals such as Technology, Healthcare, and BFSI.
Other concerns such as potential delays in discretionary spend persist. However,
we believe subdued multiples offer adequate margin for safety. Even on
depressed FY21E earnings, the stock is currently trading at 11x FY21E EPS. Our
Target Price is based on 12x FY22E EPS.
FY19
2Q
118.2
-4.3
8,356
0.2
9.8
30.5
18.1
1,436
17.2
12.4
231
30.5
881
0.9
6.7
11.0
FY20
2Q
125.5
4.9
8,846
6.3
5.9
29.9
21.0
1,216
13.8
8.9
364
25.5
861
4.4
-2.3
11.3
FY19
3Q
129.4
3.1
9,227
4.3
6.8
28.6
19.9
1,234
13.4
8.7
334
22.9
879
2.2
-4.1
11.5
FY20
Est.
4QFY20
125.5
-3.0
9,039
-2.0
8.7
28.0
20.0
1,126
12.5
8.0
262
25.0
739
13.5
-16.0 1132bp
-12.6 1178bp
9.7
13.5
(INR m)
Var. (%
/ bp)
1.2
116bp
2.5
243bp
270bp
129bp
5bp
13.4
132bp
125bp
4.6
Valuation view – Soft multiples offer a favorable trade-off!
Quarterly performance (IFRS)
Y/E March
(Consolidated)
Revenue (USD m)
QoQ (%)
Revenue (INR m)
QoQ (%)
YoY (%)
GPM (%)
SGA (%)
EBITDA
EBITDA Margin (%)
EBIT Margin (%)
Other income
ETR (%)
PAT
QoQ (%)
YoY (%)
EPS (INR)
1Q
123.6
5.7
8,343
10.9
14.6
30.8
18.8
1,400
16.8
12.0
187
26.4
873
18.5
16.3
10.9
3Q
120.8
2.2
8,642
3.4
9.1
33.6
18.5
1,703
19.7
15.1
-12
29.2
917
4.1
0.1
11.5
4Q
118.3
-2.1
8,319
-3.7
10.5
32.3
21.6
1,266
15.2
10.7
224
24.1
845
-7.9
14.6
10.6
1Q
119.6
1.1
8,321
0.0
-0.3
30.1
20.3
1,202
14.4
9.8
282
24.9
825
-2.4
-5.6
10.7
4Q
127.1
481
502
-1.8
2.2
4.3
9,264 33,659 35,658
0.4
11.4
11.0
5.9
29.3
31.8
29.5
20.0
19.2
20.3
1,277 5,805 4,930
13.8
17.2
13.8
9.2
12.6
9.2
274
631 1,254
25.9
27.7
24.8
838 3,517 3,403
-4.7
-0.8
8.8
-3.2
11.0
44.0
44.4
6 May 2020
2
 Motilal Oswal Financial Services
Persistent Systems
Key performance indicators
Y/E March
1Q
Revenue Breakup ( USD M)
Services
IP Led
Margins (%)
Gross Margin
EBIT Margin
Net Margin
Operating metrics
Headcount
Utilization (%)
Attrition (%)
Billing Rate (USD/ppm)
Onsite
Offshore
Yield (USD/ppm)
89.7
33.9
35.6
12.0
10.5
8,902
80.7
14.8
16,360
4,333
5,497
FY19
2Q
88.0
30.3
35.3
12.4
10.5
9,302
81.9
15.4
15,787
4,372
5,329
3Q
90.6
30.2
38.2
15.1
10.6
9,530
82.1
16.4
16,204
4,392
5,386
4Q
92.7
25.6
36.8
10.7
10.2
9,962
79.7
16.7
16,846
4,385
5,082
1Q
93.9
25.7
34.7
9.8
9.9
10,167
77.9
17.1
16,742
4,427
4,953
FY20
2Q
97.3
28.2
34.7
8.9
9.7
10,543
77.6
15.7
17,155
4,437
5,134
FY19
3Q
102.0
27.4
33.3
8.7
9.5
10,532
79.8
14.9
16,761
4,420
5,231
4Q
106.3
20.7
33.8
9.2
9.0
10,632
78.7
14.3
17,276
4,427
4,906
361.1
119.9
36.5
12.6
10.4
9,962
81.1
16.7
16,299
4,371
5,324
399.5
102.1
34.1
9.2
9.5
10,632
78.5
14.3
16,984
4,428
5,056
FY20
Highlights from management commentary
The company is cautiously optimistic on performance in the coming quarters,
even as COVID-19-led uncertainty prevails. Management expects a near U
shaped recovery over the next few quarters.
Management hinted at a healthy deal pipeline, with good contribution across
channels (internal sales team and advisory firms such as ISG and Zinnov). The
company further indicated it was targeting new logos and receiving incremental
requests for business in existing accounts, driven by the COVID-19 disruption.
Within Services, all the verticals – BFSI, Healthcare & Life Sciences, and Tech –
are largely resilient. Even as spend on erstwhile legacy applications is expected
to face headwinds, management highlighted clients are pursuing spends in new
areas.
Due to the COVID-19 crisis, the company is witnessing a trend of delays in
certain deal ramp-ups as well as requests for price discounts and credit
extension. However, PSYS is very cautious in accommodating these requests and
does not expect any major impact due to the same.
Surprise on revenue and margin; Decline in IP-led revenue
In 4QFY20, revenue (USD) / EBIT (INR) / PAT increased 7%/-4%/-1% YoY v/s our
estimates of 6%/-19%/-13% YoY.
Technology Services Unit (TSU) reported strong growth of 4.2% QoQ despite the
disruption from COVID-19 during the quarter. Growth in this segment was broad
based across top clients and led by offerings such as salesforce
services/cloud/infrastructure.
However, overall revenue decline was attributed to sharp decline in the IP
segment (~24% QoQ). The issue of seasonality, in this case, was compounded by
the lockdown.
Across verticals, the IP decline was reflected in the Tech Companies & Emerging
vertical (-3.9% QoQ, ~50% of revenues). Revenue in BFSI and Healthcare & Life
Sciences (~50% of combined revenue) remained largely stable.
13 January 2020
3
 Motilal Oswal Financial Services
Persistent Systems
Revenue from the top account fell sharply (-12% QoQ). While growth in the top
2–5 clients came in strong at 5% QoQ, the top 6–10 accounts (-6% QoQ, USD)
remained an overhang on growth.
Even as the Americas and Europe reported a drop (-2% /-18% QoQ), RoW
delivered healthy growth (+16% QoQ).
The EBIT margin expanded ~50bp QoQ to ~9.2% (v/s 8% est.). Lower IP royalty
expense led to gross margin expansion (+70 bps). This was partially offset by an
increase in SG&A costs and a one-time provision for expected credit loss.
Exhibit 1: Growth during the quarter was led by ISV and Enterprise
Industry Classification
ISV
Enterprise
IP Led
Contri. To Rev (%)
41.7
42.0
16.3
Growth (QoQ %)
Growth (YoY %)
5.0
8.7
3.6
21.3
-24.5
-19.0
Source: Company, MOFSL
Exhibit 2: While BFSI and Healthcare remained largely stable, Technology reported decline
Verticals
BFSI
Healthcare & Life Science
Tech. Cos. & Emerging Verticals
Contri. To Rev (%)
31.3
19.2
49.5
Growth (QoQ %)
0.7
-0.3
-4.0
Growth (YoY %)
24.5
5.2
-0.4
Source: Company, MOFSL
Exhibit 3: Services and Digital grew, while Alliance witnessed sharp decline
New Classification
Services
Digital
Alliance
Accelerite
Contri. To Rev (%)
48.4
25.3
22.2
4.1
Growth (QoQ %)
Growth (YoY %)
2.2
16.5
7.0
11.4
-18.4
-3.9
11.8
-29.0
Source: Company, MOFSL
Exhibit 4: North America remained largely stable despite the COVID-19 impact in March
Geographies
North America
Europe
ROW
Contri. To Rev (%)
80.2
8.8
11.0
Growth (QoQ %)
-1.7
-18.5
16.1
Growth (YoY %)
6.5
19.6
5.5
Source: MOFSL, Company
Exhibit 5: Top client reported sharp revenue decline
Client Metrics
Top Client
Top 5 Clients
Top 10 Clients
Contri. To Rev (%)
19.2
41.5
49.9
Growth (QoQ %)
-12.3
-3.7
-4.1
Growth (YoY %)
2.1
11.4
6.8
Source: MOFSL, Company
6 May 2020
4
 Motilal Oswal Financial Services
Persistent Systems
Valuation view – Soft multiples offer favorable trade-off
Historically, execution challenges and volatility in the IP portfolio have led to
inconsistency in the company’s performance. However, we noticed steady
progress on the execution front post the management/strategy change.
This was evident in the consistent performance from the Services segment over
past few quarters, notwithstanding the COVID-19 disruption in 4Q. Additionally,
we expect a higher emphasis on annuity revenue to address the performance
consistency issue to an extent.
The company’s robust performance in 4Q (barring IP), healthy deal pipeline, and
cautiously optimistic outlook indicate the near term COVID-19 disruption would
not be as bad as we initially anticipated.
Over the medium term, Persistent should be a key beneficiary of the COVID-19-
led increase in uptake in digital services, given its high exposure to salesforce
consulting and verticals such as Technology, Healthcare, and BFSI.
Other concerns such as potential delays in discretionary spend persist. However,
we believe subdued multiples offer adequate margin for safety. Even on
depressed FY21E earnings, the stock is currently trading at 11x FY21E EPS. Our
Target Price is based on 12x FY22E EPS.
Exhibit 6: Change in estimates
Revised
INR/USD
USD Revenue - m
Growth (%)
EBIT margin(%)
PAT (INR M)
EPS
FY21E
76.0
498
(0.7)
9.5
3,474
45.5
FY22E
77.0
551
10.6
12.0
4,632
60.6
FY21E
73.5
485
(3.1)
7.6
2,862
37.4
Earlier
FY22E
73.5
519
7.0
9.9
3,852
50.4
Change
FY21E
3.4%
2.7%
230bps
190bps
21.4%
21.5%
FY22E
4.8%
6.1%
350bps
210bps
20.2%
20.3%
Source: MOFSL, Company
Exhibit 7: PE (1yr forward)
Persistent - 1yr fwd P/E
26
22
18
14
10
6
Source: MOFSL, Bloomberg
6 May 2020
5
 Motilal Oswal Financial Services
Persistent Systems
Exhibit 8: Operating metrics
1QFY19
Geography (%)
North America
Europe
RoW
Vertical Mix (%)
BFSI
Healthcare & Life Science
Tech. Cos. & Emerging Verticals
Industry Classification (%)
ISV
Enterprise
IP Led
Revenue Mix (%)
Services: Onsite
Services: Offshore
IP Led
Client Metrics (%)
Top Client
Top 5 Clients
Top 10 Clients
Clients billed
Services
IP Led
Customer Engagement Size
USD3m+
USD1-3m
DSO
Employee Metrics
Technical People
Sales & BD
Others
Total
Billable Person Months
- Onsite
- Offshore
Linear Utilization %
Onsite Utilization %
Offshore Utilization %
Attrition (%)
IP Led Person Months
Yield (USD/p.p.m)
Billing Rates (USD/p.p.m)
Onsite
Offshore
79.7
12.0
8.3
23.7
17.6
58.7
38.8
33.8
27.4
31.1
41.5
27.4
23.8
43.8
53.7
438
181
18
58
68
8,196
237
469
8,902
2,757
14,836
80.7
85.2
79.9
14.8
4,891
5,497
16,360
4,333
2QFY19
82.6
7.5
9.9
24.7
18.2
57.1
39.5
34.9
25.6
29.7
44.7
25.6
25.7
43.3
52.4
433
178
18
56
63
8,566
247
489
9,302
2,656
14,827
81.9
83.6
81.6
15.4
4,704
5,329
15,787
4,372
3QFY19
83.7
7.6
8.7
25.7
18.2
56.1
39.8
35.2
25.0
29.9
45.1
25.0
26.3
45.0
54.6
437
192
20
56
61
8,761
266
503
9,530
2,659
15,163
82.1
83.9
81.8
16.4
4,613
5,386
16,204
4,392
4QFY19
80.9
7.9
11.2
27.0
19.6
53.4
41.2
37.2
21.6
31.4
47.0
21.6
20.2
40.0
50.2
420
185
20
57
63
9,185
273
504
9,962
2,630
16,034
79.7
83.9
79.0
16.7
4,618
5,082
16,846
4,385
1QFY20
82.5
8.5
9.0
27.7
18.9
53.4
40.6
37.9
21.5
30.5
48.0
21.5
23.6
44.6
52.6
429
167
22
56
65
9,363
272
532
10,167
2,658
16,783
77.9
82.0
77.2
17.1
4,711
4,953
16,742
4,427
2QFY20
81.4
9.9
8.7
28.4
18.4
53.2
38.6
38.9
22.5
31.0
46.5
22.5
23.7
44.3
53.4
470
156
20
56
64
9,726
285
532
10,543
2,779
17,067
77.6
81.7
77.0
15.7
4,602
5,134
17,155
4,437
3QFY20
80.1
10.6
9.3
30.5
18.9
50.6
39.0
39.8
21.2
31.5
47.3
21.2
21.5
42.3
51.1
483
154
22
53
68
9,729
266
537
10,532
2,893
17,526
79.8
84.0
79.1
14.9
4,325
5,231
4QFY20
80.2
8.8
11.0
31.3
19.2
49.5
41.7
42.0
16.3
33.0
50.7
16.3
19.2
41.5
49.9
501
151
20
52
65
9,835
263
534
10,632
2,872
18,708
78.7
84.4
77.8
14.3
4,317
4,906
16,761
17,276
4,420
4,427
Company, MOFSL
6 May 2020
6
 Motilal Oswal Financial Services
Persistent Systems
Financials and valuations
Income Statement
Y/E March
Sales
Change (%)
Cost of Goods Sold
Gross Profit
% of Net Sales
Selling Expenses
EBITDA
% of Net Sales
Depreciation
EBIT
% of Net Sales
Other Income
PBT
Tax
Rate (%)
Net Income
Change (%)
2015
18,913
13.3
11,317
7,596
40.2
3,690
3,906
20.7
939
2,967
15.7
932
3,900
993
25.5
2,906
16.6
2016
23,123
22.3
14,305
8,819
38.1
4,648
4,170
18.0
965
3,205
13.9
750
3,956
983
24.8
2,973
2.3
2017
28,784
24.5
18,518
10,266
35.7
5,613
4,653
16.2
1,490
3,163
11.0
958
4,121
992
24.1
3,129
5.2
2018
30,337
5.4
19,704
10,633
35.0
5,946
4,687
15.5
1,585
3,102
10.2
1,190
4,293
1,062
24.7
3,231
3.3
2019
33,659
11.0
21,378
12,281
36.5
6,476
5,805
17.2
1,573
4,233
12.6
631
4,863
1,347
27.7
3,517
8.8
2020
35,658
5.9
23,494
12,164
34.1
7,234
4,930
13.8
1,660
3,270
9.2
1,254
4,523
1,121
24.8
3,403
-3.2
(INR Million)
2021E
37,846
6.1
24,976
12,870
34.0
7,510
5,360
14.2
1,779
3,582
9.5
1,050
4,631
1,158
25.0
3,474
2.1
2022E
42,390
12.0
27,455
14,935
35.2
7,875
7,060
16.7
1,992
5,068
12.0
1,109
6,177
1,544
25.0
4,632
33.4
Balance Sheet
Y/E March
Share Capital
Other Reserves
Net Worth
Loans
MI/others
Capital Employed
Net Block
CWIP
Investments
Other
Current Assets
Debtors
Cash & BB
Other Current Assets
Current Liab. & Prov
Net Current Assets
Application of Funds
E: MOFSL Estimates
2015
800
13,255
14,055
25
1
14,081
4,053
40
2,116
350
11,188
4,388
6,036
764
3,665
7,523
14,081
2016
800
15,593
16,393
26
1
16,420
4,188
265
1,348
2,129
13,136
5,875
6,260
1,001
4,646
8,490
16,420
2017
800
18,193
18,993
22
20
19,034
5,737
290
3,393
438
13,949
6,516
6,009
1,424
4,772
9,176
19,034
2018
800
20,472
21,272
17
-
21,289
5,045
52
3,061
540
17,620
6,547
8,330
2,743
5,030
12,590
21,289
2019
791
22,656
23,447
12
253
23,712
3,927
316
4,859
555
18,900
6,758
10,019
2,123
4,844
14,056
23,712
2020
791
22,302
23,093
46
544
23,684
4,226
303
5,156
1,380
19,092
5,922
9,737
3,433
6,474
12,618
23,684
(INR Million)
2021E
791
25,060
25,852
46
544
26,442
114
303
5,156
1,448
25,944
5,879
16,414
3,651
6,522
19,422
26,442
2022E
791
28,799
29,590
46
544
30,180
241
303
5,156
1,617
30,107
6,499
19,405
4,203
7,244
22,863
30,181
6 May 2020
7
 Motilal Oswal Financial Services
Persistent Systems
Financials and valuations
Ratios
Y/E March
Diluted (INR)
EPS
Cash EPS
Book Value
DPS
Payout %
Valuation (x)
P/E
Cash P/E
EV/EBITDA
EV/Sales
Price/Book Value
Dividend Yield (%)
Profitability Ratios (%)
RoE
RoCE
RoIC
Turnover Ratios
Debtors (Days)
Asset Turnover (x)
2015
36.3
48.1
175.8
10.0
27.5
13.9
10.5
8.8
1.8
2.9
2.0
22.1
16.6
25.3
85
4.7
2016
37.2
49.2
204.9
8.0
21.5
13.6
10.3
8.2
1.5
2.5
1.6
19.5
15.8
24.4
93
5.6
2017
39.1
57.7
237.4
9.0
23.0
12.9
8.7
7.4
1.2
2.1
1.8
17.0
13.5
18.7
83
5.8
2018
40.4
60.2
265.8
0.0
0.0
12.5
8.4
6.8
1.1
1.9
0.0
16.0
11.6
15.7
79
5.6
2019
44.0
63.8
293.9
11.0
25.0
11.5
7.9
5.2
0.9
1.7
2.2
15.0
13.6
21.1
73
7.5
2020
44.4
66.3
302.2
12.0
27.0
11.4
7.6
5.9
0.8
1.7
2.4
14.3
10.2
14.6
61
8.7
2021E
45.5
68.7
338.3
8.0
17.6
11.1
7.3
4.1
0.6
1.5
1.6
13.1
10.4
22.5
57
17.4
2022E
60.6
86.7
387.3
10.0
16.5
8.3
5.8
2.7
0.5
1.3
2.0
15.3
13.1
30.5
56
239.3
Cash Flow Statement
Y/E March
CF from Operations
Chg. in Working Capital
Net Operating CF
Net Purchase of FA
Free Cash Flow
Net Purchase of Invest.
Net Cash from Inv.
Issue of shares
Proceeds from LTB/STB
Dividend Payments
Net CF from Finan.
Net Cash Flow
Opening Cash Balance
Closing CashBalance
E: MOFSL Estimates
2015
3,402
-276
3,125
-954
2,172
-1,362
-2,315
0
11
-667
-657
153
5,028
5,181
2016
3,826
-724
3,102
-1,647
1,454
486
-1,162
0
-15
-1,251
-1,266
674
6,036
6,710
2017
3,916
-1,062
2,854
-2,169
685
-50
-2,220
0
-6
-578
-584
50
6,260
6,310
2018
4,033
56
4,089
-651
3,437
-2,822
-3,474
0
-6
-950
-956
-341
6,009
5,668
2019
4,613
-290
4,323
-374
3,949
-1,885
-2,259
0
-580
-1,017
-1,596
468
8,330
8,798
2020
4,597
-1,369
3,228
-746
2,482
597
-148
0
-1,703
-1,301
-3,003
76
10,019
10,096
(INR Million)
2021E
4,352
-127
4,226
-1,892
2,333
833
-1,060
0
0
-715
-715
2,451
9,737
12,188
2022E
5,716
-451
5,265
-2,119
3,146
739
-1,380
0
0
-894
-894
2,991
16,414
19,405
6 May 2020
8
 Motilal Oswal Financial Services
Persistent Systems
Explanation of Investment Rating
Investment Rating
Expected return (over 12-month)
BUY
>=15%
SELL
< - 10%
NEUTRAL
< - 10 % to 15%
UNDER REVIEW
Rating may undergo a change
NOT RATED
We have forward looking estimates for the stock but we refrain from assigning recommendation
*In ca
se the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall within following 30
days take appropriate measures to make the recommendation consistent with the investment rating legend.
Disclosures
The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).
Motilal Oswal Financial Services Ltd. (MOFSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOFSL, the Research Entity (RE) as defined in the Regulations,
is engaged in the business of providing Stock broking services, Investment Advisory Services, Depository participant services & distribution of various financial products. MOFSL is a subsidiary
company of Passionate Investment Management Pvt. Ltd.. (PIMPL). MOFSL is a listed public company, the details in respect of which are available on www.motilaloswal.com. MOFSL
(erstwhile Motilal Oswal Securities Limited - MOSL) is registered with the Securities & Exchange Board of India (SEBI) and is a registered Trading Member with National Stock Exchange of
India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE), Multi Commodity Exchange of India Limited (MCX) and National Commodity & Derivatives Exchange Limited (NCDEX) for its
stock broking activities & is Depository participant with Central Depository Services Limited (CDSL) National Securities Depository Limited (NSDL),NERL, COMRIS and CCRL and is member
of Association of Mutual Funds of India (AMFI) for distribution of financial products and Insurance Regulatory & Development Authority of India (IRDA) as Corporate Agent for insurance
products.
Details of associate entities of Motilal Oswal Financial Services Limited are available on the website at
http://onlinereports.motilaloswal.com/Dormant/documents/List%20of%20Associate%20companies.pdf
MOFSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and buy or sell
the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a
market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have any other potential conflict of
interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the specific recommendations made by the
analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even though there might exist an inherent conflict of interest in
some of the stocks mentioned in the research report
MOFSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, the recipients of this report should be aware
that MOFSL may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific merchant banking, investment
banking or brokerage service transactions. Details of pending Enquiry Proceedings of Motilal Oswal Financial Services Limited are available on the website at
https://galaxy.motilaloswal.com/ResearchAnalyst/PublishViewLitigation.aspx
A graph of daily closing prices of securities is available at
www.nseindia.com, www.bseindia.com.
Research Analyst views on Subject Company may vary based on Fundamental research and
Technical Research. Proprietary trading desk of MOFSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated from MOFSL research activity
and therefore it can have an independent view with regards to Subject Company for which Research Team have expressed their views.
Regional Disclosures (outside India)
This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or use
would be contrary to law, regulation or which would subject MOFSL & its group companies to registration or licensing requirements within such jurisdictions.
For Hong Kong:
This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong Kong Securities
and Futures Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst Regulations) 2014 Motilal
Oswal Securities (SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of research report in Hong Kong. This report
is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity to which this document relates is only available to
professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these securities, products and services in any jurisdiction where their offer
or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not located in Hong Kong & are not conducting Research Analysis in Hong Kong.
For U.S.
Motilal Oswal Financial Services Limited (MOFSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under applicable state
laws in the United States. In addition MOFSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act" and together with the 1934
Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any brokerage and investment services provided by
MOFSL , including the products and services described herein are not available to or intended for U.S. persons. This report is intended for distribution only to "Major Institutional Investors" as
defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional investors"). This document must not be acted on or relied on
by persons who are not major institutional investors. Any investment or investment activity to which this document relates is only available to major institutional investors and will be engaged in
only with major institutional investors. In reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and
interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOFSL has entered into a
chaperoning agreement with a U.S. registered broker-dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be
executed within the provisions of this chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered
broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public appearances and trading
securities held by a research analyst account.
For Singapore
In Singapore, this report is being distributed by Motilal Oswal Capital Markets Singapore Pte Ltd (“MOCMSPL”) (Co.Reg. NO. 201129401Z) which is a holder of a capital markets services
license and an exempt financial adviser in Singapore.As per the approved agreement under Paragraph 9 of Third Schedule of Securities and Futures Act (CAP 289) and Paragraph 11 of First
Schedule of Financial Advisors Act (CAP 110) provided to MOCMSPL by Monetary Authority of Singapore. Persons in Singapore should contact MOCMSPL in respect of any matter arising
from, or in connection with this report/publication/communication. This report is distributed solely to persons who qualify as “Institutional Investors”, of which some of whom may consist of
"accredited" institutional investors as defined in section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore (“the SFA”). Accordingly, if a Singapore person is not or ceases to be
such an institutional investor, such Singapore Person must immediately discontinue any use of this Report and inform MOCMSPL.
Specific Disclosures
1 MOFSL, Research Analyst and/or his relatives does not have financial interest in the subject company, as they do not have equity holdings in the subject company.
2 MOFSL, Research Analyst and/or his relatives do not have actual/beneficial ownership of 1% or more securities in the subject company
3 MOFSL, Research Analyst and/or his relatives have not received compensation/other benefits from the subject company in the past 12 months
4 MOFSL, Research Analyst and/or his relatives do not have material conflict of interest in the subject company at the time of publication of research report
5 Research Analyst has not served as director/officer/employee in the subject company
6 MOFSL has not acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
7 MOFSL has not received compensation for investment banking/ merchant banking/brokerage services from the subject company in the past 12 months
8 MOFSL has not received compensation for other than investment banking/merchant banking/brokerage services from the subject company in the past 12 months
9 MOFSL has not received any compensation or other benefits from third party in connection with the research report
10 MOFSL has not engaged in market making activity for the subject company
********************************************************************************************************************************
The associates of MOFSL may have:
-
financial interest in the subject company
-
actual/beneficial ownership of 1% or more securities in the subject company
-
received compensation/other benefits from the subject company in the past 12 months
6 May 2020
9
 Motilal Oswal Financial Services
Persistent Systems
-
other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the specific
recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even though there
might exist an inherent conflict of interest in some of the stocks mentioned in the research report.
-
acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
-
be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company(ies)
discussed herein or act as an advisor or lender/borrower to such company(ies)
-
received compensation from the subject company in the past 12 months for investment banking / merchant banking / brokerage services or from other than said services.
The associates of MOFSL has not received any compensation or other benefits from third party in connection with the research report
Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only. While calculating beneficial holdings, It does not consider
demat accounts which are opened in name of MOFSL for other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income from clients which are not
considered in above disclosures.
Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research
analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.
Terms & Conditions:
This report has been prepared by MOFSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and may not be
altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of MOFSL. The report is
based on the facts, figures and information that are considered true, correct, reliable and accurate. The intent of this report is not recommendatory in nature. The information is obtained from
publicly available media or other sources believed to be reliable. Such information has not been independently verified and no guaranty, representation of warranty, express or implied, is made
as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. The report is prepared solely for informational purpose and does not
constitute an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments for the clients. Though disseminated to all the customers
simultaneously, not all customers may receive this report at the same time. MOFSL will not treat recipients as customers by virtue of their receiving this report.
Disclaimer:
The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or
in whole, to any other person or to the media or reproduced in any form, without prior written consent. This report and information herein is solely for informational purpose and may not be
used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Nothing in this report constitutes investment, legal,
accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities discussed and opinions expressed in this
report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This
may not be taken in substitution for the exercise of independent judgment by any recipient. Each recipient of this document should make such investigations as it deems necessary to arrive at
an independent evaluation of an investment in the securities of companies referred to in this document (including the merits and risks involved), and should consult its own advisors to
determine the merits and risks of such an investment. The investment discussed or views expressed may not be suitable for all investors. Certain transactions -including those involving futures,
options, another derivative products as well as non-investment grade securities - involve substantial risk and are not suitable for all investors. No representation or warranty, express or implied,
is made as to the accuracy, completeness or fairness of the information and opinions contained in this document. The Disclosures of Interest Statement incorporated in this document is
provided solely to enhance the transparency and should not be treated as endorsement of the views expressed in the report. This information is subject to change without any prior notice. The
Company reserves the right to make modifications and alternations to this statement as may be required from time to time without any prior approval. MOFSL, its associates, their directors and
the employees may from time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform
or seek to perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a
separate, distinct and independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of information that is
already available in publicly accessible media or developed through analysis of MOFSL. The views expressed are those of the analyst, and the Company may or may not subscribe to all the
views expressed therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or
published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any
locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject MOFSL to any registration or
licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose
possession this document may come are required to inform themselves of and to observe such restriction. Neither the Firm, not its directors, employees, agents or representatives shall be
liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information.
The person accessing this information specifically agrees to exempt MOFSL or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not
to hold MOFSL or any of its affiliates or employees responsible for any such misuse and further agrees to hold MOFSL or any of its affiliates or employees free and harmless from all losses,
costs, damages,
expenses that may be suffered by the person accessing this information due to any errors and delays.
Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 71934200/ 022-71934263; Website
www.motilaloswal.com.CIN no.: L67190MH2005PLC153397.Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road, Malad(West), Mumbai-
400 064. Tel No: 022 7188 1000.
Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst: INH000000412. AMFI:
ARN - 146822; Investment Adviser: INA000007100; Insurance Corporate Agent: CA0579;PMS:INP000006712. Motilal Oswal Asset Management Company Ltd. (MOAMC): PMS (Registration
No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth Management Ltd. (MOWML): PMS (Registration No.:
INP000004409) is offered through MOWML, which is a group company of MOFSL. Motilal Oswal Financial Services Limited is a distributor of Mutual Funds, PMS, Fixed Deposit, Bond,
NCDs,Insurance Products and IPOs.Real Estate is offered through Motilal Oswal Real Estate Investment Advisors II Pvt. Ltd. which is a group company of MOFSL. Private Equity is offered
through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group company of MOFSL. Research & Advisory services is backed by proper research. Please read the Risk
Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no assurance or guarantee of the returns. Investment in securities market is subject to market risk,
read all the related documents carefully before investing. Details of Compliance Officer: Name: Neeraj Agarwal, Email ID: na@motilaloswal.com, Contact No.:022-71881085.
* MOSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National Company Law
Tribunal, Mumbai Bench.
6 May 2020
10