Buy Persistent Systems Ltd - PINC Result Update

Persistent reported Q1FY11 with USD revenue growth of 5.8%QoQ led by volume growth of 3%QoQ, realisation improvement by 1.2%QoQ and IP led revenues grew 1.6%QoQ.

- In line revenue growth, margins exert pressure
- Sustainable growth in US, India & APAC geography outperform, Infrastructure & systems verticals lead growth
- New initiatives and strong client mining will boost volumes

Outlook – FY11 USD revenue guidance expected to be revised and strong hiring outlook

Persistent maintains 22%YoY revenue growth in USD terms (USD155mn) and it has achieved USD39.49mn in Q1FY11. No sequential growth from current levels will also lead to outperformance of the guidance; we thus expect the guidance to be revised upwards. Net addition was strong and Persistent added 249 employees in the quarter. The hiring guidance for FY11 is 1,600 (gross adds) which proves the confidence in the demand environment and improvement in visibility.

We maintain our 'BUY' recommendation on the stock with a price target of Rs588.

Source : Equity Bulls

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