Persistent Systems
BSE SENSEX
29,943
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
Avg Val, INRm
Free float (%)
S&P CNX
9,307
PSYS IN
80
45.4 / 0.7
Upgrading to “Buy” on expectations of margin cycle reversal
758 / 501
Above-estimate margin was the key highlight of 4Q…:
PSYS’ 4QFY17 EBITDA
-8/-22/-38
margin expanded 200bp QoQ to 17.9% (ex. exceptional item), implying a
66
270bp beat, led by a combination of factors such as SGA optimization, bad
65.0
25 April 2017
4QFY17 Results Update | Sector: Technology
CMP: INR568
TP: INR700(+23%)
Buy
Impressive margin beat
Financials & Valuations (INR b)
2017 2018E
Y/E Mar
28.8
31.1
Net Sales
4.7
5.2
EBITDA
3.1
3.5
PAT
37.7
43.9
EPS (INR)
1.4
16.6
Gr. (%)
244.5
254.7
BV/Sh (INR)
17.0
18.1
RoE (%)
16.7
16.0
RoCE (%)
15.1
12.9
P/E (x)
2.3
2.2
P/BV (x)
2019E
35.0
6.0
4.1
51.4
16.9
265.3
20.3
17.3
11.1
2.1
Estimate change
TP change
Rating change
Quarterly Performance (Consolidated)
Y/E March
(Consolidated)
Revenue (USD m)
QoQ (%)
Revenue (INR m)
QoQ (%)
YoY (%)
GPM (%)
SGA (%)
EBITDA
EBITDA Margin (%)
EBIT Ma rgi n (%)
Other i ncome
ETR (%)
PAT
QoQ (%)
YoY (%)
EPS (INR)
Headcount
Uti l excl . tra i nees (%)
Attri ti on (%)
IP rev. proporti on(%)
1Q
78.6
-1.8
5,004
0.6
15.0
39.7
20.4
969
19.4
14.8
198
28.5
672
-11.6
-2.3
8.4
8,454
72.9
16.4
18.4
debts recovery and some pruning in costs related to the IBM IoT deal.
Revenue declined 0.9% QoQ to USD109m, marginally below our estimate of
USD110.5m. Adjusted PAT grew 2.8% QoQ to INR842m, above our estimate
of INR706m, led by strong EBITDA beat.
…capping a mixed FY17:
During the full year FY17, dollar revenue grew 22%
YoY to USD429m (and ~11% organically), EBITDA rose 11.6% YoY to
INR4,653m and PAT grew 5.2% YoY to INR3,129m. While revenue traction
was healthy, margin contraction of 180bp YoY (albeit on expected lines post
IBM IoT arrangement) and total revenues from the IBM deal were a couple
of pushbacks.
Segmental performance on expected lines:
Product Engineering Services
(43.9% of revenues, includes ISVs except IBM) was down 0.9% QoQ, while
Digital (~20% of revenues) drove growth (+11% QoQ). Revenues from IBM
alliance (31% of business) fell 10.6% QoQ, impacted entirely by seasonality
in the IoT deal (-USD3.5m QoQ).
Valuation view – Upgrade to Buy:
We believe that margins have bottomed
out and should start showing improvement YoY, ending three years of
contraction (from 26% in FY14 to 16% in FY17). This, combined with 10%
revenue CAGR over FY17-19E (facilitated by Digital), leads to 15% earnings
CAGR during this period. The stock trades at 13x FY18E and 11x FY19E EPS.
Our target price of INR700 discounts FY19E EPS by 14x, implying 24% upside.
We upgrade PSYS to
Buy.
(INR Millon)
4Q
100.4
12.0
6,771
14.4
36.1
35.7
19.8
1,074
15.9
12.1
210
21.4
808
4.3
6.3
10.1
9,264
75.2
16.4
28.2
1Q
104.8
4.3
7,018
3.6
40.2
34.7
19.6
1,058
15.1
10.2
253
24.3
733
-9.3
9.0
9.2
9,389
75.3
16.7
28.2
FY17
2Q
105.2
0.4
7,040
0.3
29.7
35.5
19.8
1,108
15.7
10.5
243
25.3
735
0.3
2.3
9.2
9,305
74.2
15.9
27.8
FY16
3Q
110.0
4.6
7,455
5.9
25.9
36.3
20.4
1,187
15.9
10.7
318
26.7
819
11.4
5.7
10.2
9,229
78.9
15.8
28.4
4Q
109.0
-0.9
7,271
-2.5
7.4
36.1
18.2
1,302
17.9
12.5
143
19.9
842
2.8
4.2
9.1
9,460
77.8
27.6
352
14.0
23,123
22.3
38.1
20.1
4,171
18.0
13.9
750
24.8
2,974
2.3
37.2
9,264
74.7
21.1
Est. Var. (% /
bp)
4QFY17
429
110.5
-1.4
22.0
0.5 -137bp
28,784
7,362
-1.2
-1.3 -121bp
24.5
8.7 -134bp
35.7
35.0
112bp
19.5
19.4
-113bp
4,653
1,116
16.7
16.2
15.2
275bp
11.0
9.8
264bp
958
217
-34.1
24.1
25.0
3,129
706
19.3
-13.8
nm
5.2
-12.6
nm
37.7
8.8
9,460
9,271
2.0
76.6
78.3
-45bp
28.0
29.0
-140bp
FY16
2Q
3Q
83.0
89.7
5.5
8.1
5,427
5,921
8.5
9.1
16.9
19.7
38.9
38.8
20.2
20.1
1,018
1,110
18.7
18.8
14.4
14.6
182
160
25.5
24.4
718
775
6.9
7.8
0.7
4.1
9.0
9.7
8,545
8,966
76.1
74.5
17.1
17.1
16.2
20.1
FY17
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.
Ashish Chopra
(Ashish.Chopra@MotilalOswal.com); +91 22 6129 1530
Sagar Lele
(Sagar.Lele@MotilalOswal.com); +91 22 6129 1531

Persistent Systems
Change in Valuation and View
Turning positive on expectation of margin cycle reversal
PSYS’ EBITDA margin declined 180bp YoY to 16.2% in FY17. Concerns on
profitability led to 24% correction in the stock price in the last one year. We
believe that the margins have bottomed out and should start showing
improvement YoY hereon, ending the 3 years of contraction from 26% in FY14 to
16% in FY17.
PSYS’ deal with IBM IoT’s Continuous Engineering Platform contributed towards
this contraction (~USD46m revenues with ~USD60m costs). Consequently,
despite overall revenue growth of 22% and ~11% organic growth, EBITDA grew
11.6% YoY and PAT grew 5.2% YoY in FY17. We expect this segment to
breakeven next year with some optimization of headcount. We are
conservatively building 100bp expansion over the next two years, which factors
for some strengthening of the INR.
That, combined with 10% revenue CAGR over FY17-19E (facilitated by the Digital
segment, 20% of business, which on its own accord should contribute 6-7pp to
overall growth), leads to 15% earnings CAGR during this period (excluding
exceptional loss in FY17).
Mid-tier IT companies with a similar trajectory in our universe (HEXW and CYL)
are trading at 10-20% premium to PSYS. Our price target of INR700 discounts
FY19E earnings by 14x, which implies an upside of 24%. Upgrade to
BUY.
Key triggers
Continued margin expansion that commenced a couple of quarters ago
Sharper growth in IBM Watson IoT
Revival of growth in Services
Key risk factors
Any pause in momentum of Digital segment, which is a key driver of growth
Pressure on margins from higher investments in new products
Continued strengthening of the Rupee v/s the US dollar
Exhibit 2: 1-year forward PB band
5.0
24.4
4.0
3.0
12.7
12.4
2.0
1.0
2.3
2.3
1.2
2.2
PB (x)
Median(x)
Exhibit 1: 1-year forward PE band
30
25
20
15
10
5
PE (x)
Median(x)
Peak(x)
Min(x)
Avg(x)
Peak(x)
Min(x)
Avg(x)
4.3
12.8
25 April 2017
2

Persistent Systems
4QFY17: Revenue growth bogged down by seasonality in IBM
PSYS’ 4QFY17 revenue declined 0.9% QoQ at USD109m, below our estimate of
0.5% QoQ growth to USD110.5m.
While the Services business grew by 0.3% QoQ, IP-led revenue declined by 3.9%
QoQ.
Exhibit 3: Digital and IP traction offset by pressure in IBM Watson IoT
Revenue (USD m)
8.6
1.5
2.2
3.9
0.0
5.0
4.2
0.6
Revenue Growth QoQ (%)
12.0
8.1
5.5
4.3
-1.8
79
83
90
100
105
0.4
4.6
-0.9
63
68
70
73
73
76
80
80
105
110
109
Source: Company, MOSL
Volumes in the linear business declined by 0.8% QoQ, with onsite volumes
growing by 2.1% and offshore volumes declining by 1.3% QoQ.
Onsite billing rates are 3.8x that at offshore for PSYS. Onsite pricing was up 1.4%
QoQ at USD15,917 per person month (PPM) while offshore pricing was down
0.3% QoQ to USD4,244 PPM.
In Rupee terms, revenue was INR7.3b, -2.5% QoQ, below our estimate. Average
realized currency rate during the quarter was INR66.7, v/s our estimate of
INR66.6.
Exhibit 4: Decline in IP revenue despite growth in 10% growth in Accelerite
IP business revenue (USD m)
37.4
-12.4
14.4 2.1
-4.8
2.9
1.0
-4.1 -0.1 -7.1
QoQ growth (%)
34.1
57.2
4.3
-1.0
6.9
-3.7
9.5
13.1 12.4 14.2 14.5 15.0 15.1 14.5 14.5 13.4 18.0 28.3 29.5 29.2 31.2 30.1
Source: Company, MOSL
Gross profit margin declined by 20bp QoQ to 36.1%, 110bp beat to our estimate
of 35.0%. Our expectation of a GPM decline was on the back of lesser revenue
from IBM Watson IoT with costs largely remaining fixed.
EBITDA margin expanded by 200bp QoQ to 17.9% (excluding exceptional item),
above our estimate of 15.2% (-70bp QoQ).
Lower CSR and some reversal of doubtful debt provisions had a positive impact
of 150bp QoQ on the margins. Even excluding the tailwind provided by these
two factors, EBITDA margins beat estimates by 120bp.
3
25 April 2017

Persistent Systems
Exhibit 5: EBITDA margin up 200bp (against expectation of -70bp)
EBITDA Margin (%)
8.9
8.9
7.6
9.0
9.4
9.9
10.2
9.9
S&M (%)
9.7
9.1
9.9
8.6
9.2
8.8
8.1
8.7
21.7 26.0 27.7 27.0 21.8 20.6 20.1 20.2 19.4 18.7 18.8 15.9 15.1 15.7 15.9 17.9
Source: Company, MOSL
Exhibit 6: Onsite utilization still on the lower side
Offshore Utilization %
84.9
89.4
Onsite Utilization %
89.7 88.6 89.2
88.5
87.4 86.6 85.9
85.9 86.9 88.0
85.3
84.7
84.2 84.0
72.9 73.2 71.6 74.6 72.8 73.6 74.0 72.9
71.8
68.8 70.3
68.4
67.7 65.9
77.6 76.7
Source: Company, MOSL
Other income (including forex gain) during the quarter stood at INR143m,
against our expectation of INR217m.
Consequently, Adjusted PAT at INR842m was above our estimate of INR706m.
The quarter included a one-time expense of INR114m in relation to a suit filed
by a US based corporation against a step down subsidiary of Persistent in 2014,
claiming damages for infringement of copyrights and breach of contract. This
matter was settled and that amount, net of insurance claim receivable has been
accounted.
Segment-wise performance
ISV revenues (42% of business) continued to remain sluggish, declining 2.3%
QoQ. Four quarter CQGR in ISV revenue stood at -0.2%.
Enterprise segment was strong (31% of business), growing 3.9% QoQ
IP revenue’s (28% of business) declined by 3.7% QoQ on account of a decline in
revenue from the IBM IoT deal on account of seasonal strength in 3Q leading to
normalization of revenue. This can be substantiated from the fact that
Accelerite showed 10.6% QoQ growth, indicating a shortfall of ~USD3m in IBM
Watson IoT revenue.
25 April 2017
4

Persistent Systems
Exhibit 7: IP led lower by IBM Watson IoT
Industry Classification
ISV
Enterprise
IP Led
Contri. to
Rev. (%)
41.9
30.5
27.6
Growth -
QoQ (%)
-2.3
3.9
-3.7
4 Qtr
CQGR (%)
-0.2
6.2
1.5
Source: Company, MOSL
Exhibit 8: Strong Digital traction continues
New Classification
Services
Digital
Alliance
Accelerite
Contri. to
Rev. (%)
47.9
20.6
30.1
10.5
Growth -
QoQ (%)
-0.9
10.8
-10.6
10.6
4 Qtr
CQGR (%)
nm
nm
nm
nm
Source: Company, MOSL
Exhibit 9: Pressure uniform across North America and Europe
Geographies
North America
Europe
RoW
Contri. to
Rev. (%)
86.5
5.3
8.2
Growth –
QoQ (%)
-1.0
-0.9
0.3
4 Qtr
CQGR (%)
2.2
-3.7
5.4
Source: MOSL, Company
Exhibit 10: Top customers apart from IBM stable
Client Metrics
Top Client
Top 2-5 Clients (%)
Top 6-10 Clients (%)
Contri. to
Rev. (%)
26.5
16.8
9.1
Growth -
QoQ (%)
-11.0
0.9
4.9
4 Qtr
CQGR (%)
3.2
4.3
2.9
Source: MOSL, Company
Takeaways from management commentary
4Q largely turned out as anticipated:
The IBM dip in revenue in 4QFY17 was
anticipated as the December ending quarter is seasonally the strongest for IBM.
Post this, there was a decline expected as the trend would normalize. This
resulted in a USD3m drop in revenue from the IBM Watson IoT deal. What was
unexpected during the quarter though was the spillage of two deals over to
1QFY18, which were expected to close earlier. However, this is a mere right-
shifting of revenue.
Strong traction in Digital:
Digital now constitutes to 20.6% of total revenue. It
maintained momentum as it grew by 10.8% QoQ in 4QFY17. The company
recently signed two partnerships that open up a large addressable market over
the medium term. In one of them, it teamed with Partners HealthCare on a new
industry-wide digital platform with a goal of bringing digital transformation to
clinical care. In the other, it got granted development rights by USAA (a financial
service provider) to patented innovations related to security in financial
services. Apart from these, it will continue to partner with providers like
Salesforce and Appian to drive growth in Digital.
4QFY17 margins explained:
Margins during the quarter were impacted by the
1.6% appreciation seen in INR against the USD (-50bp), which were offset by
recoveries in doubtful debts, leading to a reversal of provisions. SG&A too
improved as a percentage of sales, further aiding margin expansion.
5
25 April 2017

Persistent Systems
Strong outlook going forward:
Going forward, PSYS will continue its focus on
Digital, Data and IoT. The IBM business has the potential to grow in double-
digits, led by its partnership on the Watson platform. Moreover, continued
traction in Digital and scaling up of some recent partnerships would further
boost growth. Profitability is expected to continue improving as revenue growth
picks-up, and the mix gets skewed towards the higher-margin units of Digital
and IP.
Change in estimates
Baking in the slight revenue miss in 4QFY17, we are reducing our FY18/19
revenue estimates by 1.9/2.0%. With continued traction in revenue from Digital
services and IP, we expect 10% revenue CAGR over FY17-19E.
We are more confident on the margin execution for PSYS, now that it has more
flexibility to adjust costs in the IBM Watson IoT partnership. Moreover, a
changing business mix augers well for the company as the faster-growing areas
have been exhibiting higher profitability.
We have thus raised our EBIT margin estimates, and now expect expansion of
40/60bp over FY18/19E.
Consequently, our EPS estimates for FY18/19E have changed by 1.3/1.7%
respectively.
Exhibit 11: Change in estimates
FY17
67.1
429.0
22.0
16.2
37.7
Revised
FY18E
66.0
471.6
9.9
16.6
43.9
FY19E
67.3
519.9
10.2
17.2
51.4
FY17
67.1
430.5
22.4
15.5
37.4
Earlier
FY18E
67.6
481.0
11.7
16.3
43.4
FY19E FY17
68.5 0.0%
530.6 -0.3%
10.3 -40bp
17.1 70bp
50.5 0.7%
Change
FY18E
-2.4%
-1.9%
-180bp
30bp
1.3%
FY19E
-1.8%
-2.0%
-10bp
20bp
1.7%
INR/USD
USD Revenue - m
USD revenue gr. (%)
EBITDA Margin (%)
EPS - INR
Source: MOSL, Company
25 April 2017
6

Persistent Systems
Story in charts
Exhibit 12: Aggressive foray in IP-led revenues...
IP led revenues (USD m)
123.8
Growth (%)
Exhibit 13: … and strong traction in Enterprise business…
17.4
Enterprise revenues (USD m)
QoQ (%)
16.2
14.1
9.5
8.9
5.9 5.7
5.0 0.3
3.9
1.8
61.1
22.8
9.2
FY10
14.9
FY11
18.3
FY12
40.9
FY13
20.5
49.3
FY14
19.9
59.1
FY15
25.7
74.2
FY16
61.8
120.1
FY17
Source: Company, MOSL
Source: Company, MOSL
Exhibit 14: …have offset sluggish ISV business (~41% of rev)
ISV Revenues (%)
60.3 58.3 57.9 57.8 57.0 57.2
51.3
45.8 45.4 44.4 42.5
41.9
Exhibit 15: Leading to a turnaround in linear revenue
Revenue (USD m)
Growth (%)
22.0
14.7
15.2
12.6
14.0
9.9
10.2
237.8
FY13
Source: Company, MOSL
274.1
FY14
308.5
FY15
351.7
FY16
429.0
FY17
471.6
FY18E
519.9
FY19E
Source: Company, MOSL
Exhibit 16: Margins can expand as a bulk of the investments
are now behind
Exhibit 17: …Leading to 15% earnings CAGR over FY17-19
25.9
25.8
20.7
18.0
16.2
16.6
17.2
EBITDA margin (%)
31.2
32.9
PAT (INR m)
Growth (%)
16.6
2.3
1,876
2,493
FY14
2,906
FY15
2,974
FY16
1.4
3,015
FY17
16.6
16.9
3,516
FY18E
4,109
FY19E
FY13
FY14
FY15
FY16
FY17
FY18E
FY19E
FY13
Source: Company, MOSL
Source: Company, MOSL
25 April 2017
7

Persistent Systems
Operating metrics
Exhibit 18: Operating metrics
3QFY15
Segments (%)
Services
Digital
Alliance
Accelerite
Geography (%)
North America
Europe
RoW
Industry Classification (%)
ISV
Enterprise
IP Led
Revenue Mix (%)
Services: Onsite
Services: Offshore
IP Led
Client Metrics (%)
Top Client
Top 2-5 Clients
Top 6-10 Clients
Clients billed
Prod. Eng. & Platforms
IP Led
Customer Engagement Size
USD3m+
USD1-3m
Repeat Business
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
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
47.6
14.2
30.0
8.2
2QFY17
46.6
15.2
29.4
8.8
3QFY17
43.9
16.9
30.6
8.6
4QFY17
43.9
18.9
27.6
9.6
84.7
7.1
8.2
85.4
6.8
7.8
84.4
6.3
9.3
86.2
6.8
7.0
85.3
6.3
8.4
86.1
6.7
7.2
87.0
5.2
7.8
85.4
6.1
8.5
86.6
5.3
8.1
86.5
5.3
8.2
57.9
23.1
19.0
57.8
24.1
18.1
57.0
24.6
18.4
57.2
26.6
16.2
51.3
28.6
8.4
45.8
26.0
28.2
45.4
26.4
28.2
44.4
27.8
27.8
42.5
29.1
28.4
41.9
30.5
27.6
25.1
55.9
19.0
26.2
55.7
18.1
26.8
54.8
18.4
29.5
54.3
16.2
29.8
50.1
20.1
26.3
45.5
28.2
26.3
45.5
28.2
26.3
45.9
27.8
26.7
44.9
28.4
27.8
44.6
27.6
17.5
17.5
9.2
273
349
14
41
84.1
65
16.5
17.6
9.1
268
326
14
48
85.6
64
18.1
17.9
9.6
277
310
15
52
88.7
67
17.6
17.8
9.3
311
299
17
46
86.2
68
17.4
16.9
9.8
337
291
19
44
82.0
69
25.4
15.4
8.8
319
353
18
42
82.1
62
29.0
15.7
8
340
338
15
50
nm
63
28.4
15.9
8.5
314
335
15
51
nm
66
29.5
16.5
8.6
315
339
15
50
nm
70
26.5
16.8
9.1
313
308
15
55
nm
65
7,664
208
424
8,296
16,031
1,518
14,513
74.3
88.6
72.9
14.7
2,620
4,264
14,862
4,201
7,861
224
421
8,506
16,063
1,551
14,512
74.7
89.2
73.2
15.5
2,672
4,272
15,159
4,199
7,810
216
428
8,454
16,138
1,623
14,515
72.9
84.7
71.6
16.4
2,880
4,134
15,321
4,146
7,905
208
432
8,545
16,066
1,854
14,212
76.1
87.4
74.6
17.1
3,021
4,346
15,075
4,251
8,334
203
429
8,966
16,718
2,097
14,621
74.5
86.6
72.8
17.1
3,526
4,428
14,717
4,217
8,618
201
445
9,264
16,631
2,108
14,523
75.2
85.9
73.6
16.4
4,082
4,849
14,574
4,275
8,698
204
487
9,389
17,030
2,121
14,909
75.3
84.2
74
16.7
5,235
4,705
15,437
4,325
8,612
207
486
9,305
17,474
2,048
15,426
74.2
84.0
72.9
15.9
5,015
4,677
16,101
4,288
8,562
200
467
9,229
17,077
2,109
14,968
78.9
88.5
77.6
15.8
4,843
5,020
15,704
4,257
8,808
193
459
9,460
17,178
2,109
14,968
77.8
85.3
76.7
15.7
4,884
4,942
15,917
4,244
Source: MOSL, Company
25 April 2017
8

Persistent Systems
Financials and Valuations
Key assumption
Y/E Mar
INR/USD Rate
Revenues (USD m)
Services Revenue (USD m)
IP Led Revenues (USD m)
Total Headcount
Net Addition
Per Capita Ptoductivity (USD)
Linear Utilization (Blended %)
Y/E Mar
Net Sales
Change (%)
EBITDA
EBITDA Margin (%)
Depreciation
EBIT
Interest
Other Income
Extraordinary items
PBT
Tax
Tax Rate (%)
Min. Int. & Assoc. Share
Reported PAT
Adjusted PAT
Change (%)
Y/E Mar
Share Capital
Reserves
Net Worth
Debt
Deferred Tax
Total Capital Employed
Gross Fixed Assets
Less: Acc Depreciation
Net Fixed Assets
Capital WIP
Investments
Current Assets
Inventory
Debtors
Cash & Bank
Loans & Adv, Others
Curr Liabs & Provns
Curr. Liabilities
Provisions
Net Current Assets
Total Assets
2012
4.0
207.4
189.1
18.3
6,628
268
31,290
72.1
2012
10,003
28.9
2,337
23.4
611
1,726
0
256
0
1,981
551
27.8
0
1,431
1,431
2.5
2012
400
8,005
8,405
7
-107
8,376
6,090
2,892
3,197
528
123
6,189
0
2,033
3,290
866
1,660
879
781
4,528
8,376
2013
54.4
237.8
196.9
40.9
6,970
342
34,121
74.1
2013
12,945
29.4
3,352
25.9
783
2,569
0
61
0
2,630
754
28.7
0
1,876
1,876
31.2
2013
400
9,783
10,183
14
-190
10,646
6,951
3,449
3,502
1,174
173
7,690
0
2,509
3,677
1,503
1,893
845
1,048
5,797
10,646
2014
60.9
274.1
224.8
49.3
7,857
887
34,881
70.9
2014
16,692
28.9
4,303
25.8
1,026
3,277
0
150
0
3,427
934
27.3
0
2,493
2,493
32.9
2014
400
11,823
12,223
32
-260
12,389
8,545
4,468
4,077
307
823
9,966
0
3,028
5,028
1,910
2,785
1,574
1,211
7,181
12,389
2015
61.3
308.5
249.4
59.1
8,506
649
36,272
71.7
2015
18,913
13.3
3,906
20.7
939
2,967
0
932
0
3,900
993
25.5
0
2,906
2,906
16.6
2015
800
13,255
14,055
25
-315
13,885
9,408
5,331
4,076
40
2,116
11,201
0
3,586
6,036
1,579
3,549
1,793
1,755
7,653
13,885
2016
65.8
351.7
277.4
74.2
9,264
758
37,959
74.7
2016
23,123
22.3
4,171
18.0
965
3,206
0
750
0
3,956
983
24.8
0
2,974
2,974
2.3
2016
800
15,593
16,393
26
-233
16,312
10,951
6,589
4,363
265
1,348
14,857
0
4,275
6,260
4,321
4,521
3,293
1,228
10,335
16,311
2017
67.1
429.0
308.9
120.1
9,460
196
45,349
76.6
2017
28,784
24.5
4,653
16.2
1,490
3,163
0
958
0
4,121
992
24.1
0
3,129
3,129
5.2
2017
800
18,193
18,993
32
-292
18,859
13,392
8,031
5,361
376
6,652
10,896
0
5,205
1,452
4,240
4,427
2,827
1,600
6,469
18,859
2018E
66.0
471.6
338.4
133.2
10,209
749
46,198
77.5
2018E
31,128
8.1
5,174
16.6
1,586
3,588
2019E
67.3
519.9
379.2
140.7
10,908
699
47,666
78.0
2019E
34,970
12.3
6,030
17.2
1,624
4,406
Income Statement
(INR Million)
0
1,100
0
4,688
1,172
25.0
0
3,516
3,516
12.4
2018E
800
18,985
19,785
32
-292
19,651
13,692
8,425
5,267
376
6,652
11,874
0
5,281
2,353
4,240
4,518
2,868
1,650
7,356
19,651
0
1,073
0
5,479
1,370
25.0
0
4,109
4,109
16.9
2019E
800
19,812
20,612
32
-292
20,478
13,992
8,817
5,175
376
6,652
12,706
0
5,392
3,074
4,240
4,431
2,928
1,502
8,275
20,478
Balance Sheet
(INR Million)
25 April 2017
9

Persistent Systems
Financials and Valuations
Y/E Mar
Basic (INR)
EPS
Cash EPS
Book Value
DPS
Payout (incl. Div. Tax.)
Valuation(x)
P/E
Cash P/E
Price / Book Value
EV/Sales
EV/EBITDA
Dividend Yield (%)
Profitability Ratios (%)
RoE
RoCE
Turnover Ratios (%)
Asset Turnover (x)
Debtors (No. of Days)
Inventory (No. of Days)
Creditors (No. of Days)
Leverage Ratios (%)
Net Debt/Equity (x)
Ratios
2012
17.7
25.5
108.2
3.0
16.9
32.0
22.3
5.2
4.1
17.4
0.5
18.0
17.5
3.7
75
0
0
0.0
2012
2,337
-260
27
-551
0
1,553
-1,470
83
2,378
0
908
38
7
0
-19
25
2,486
804
3,290
2013
23.5
33.2
131.1
4.5
19.2
24.2
17.1
4.3
3.1
12.0
0.8
20.2
14.8
3.9
75
0
0
0.0
2013
3,352
181
260
-754
0
3,038
-1,735
1,304
-50
0
-1,785
128
8
0
-346
-211
1,043
2,634
3,677
2014
31.2
44.0
157.3
6.0
19.3
18.2
12.9
3.6
2.3
8.9
1.1
22.3
16.0
4.4
75
0
0
0.0
2014
4,303
0
-403
-934
0
2,965
-734
2,232
-650
0
-1,384
96
18
0
-398
-284
1,297
3,731
5,028
2015
36.3
48.1
180.9
10.0
27.5
15.6
11.8
3.1
1.9
9.2
1.8
22.1
18.6
4.6
75
0
0
0.0
2015
3,906
0
-207
-993
0
2,705
-670
2,035
-1,292
0
-1,963
-118
-7
0
-24
-149
593
5,443
6,036
2016
37.2
49.2
211.0
11.0
29.6
15.3
11.5
2.7
1.6
8.8
1.9
19.5
18.9
5.5
75
0
0
0.0
2016
4,171
0
-859
-983
0
2,329
-1,477
852
768
0
-709
426
1
0
-312
115
1,735
4,525
6,260
2017
37.7
56.3
244.5
9.0
23.9
15.1
10.1
2.3
1.3
7.7
1.6
17.0
16.7
5.9
75
0
0
0.0
2017
4,653
0
-1,494
-992
0
2,168
-2,600
-432
-5,304
0
-7,904
456
7
0
87
549
-5,187
6,638
1,452
2018E
43.9
63.8
254.7
12.0
27.3
12.9
8.9
2.2
1.1
6.8
2.1
18.1
16.0
5.9
75
0
0
0.0
2018E
5,174
0
15
-1,172
0
4,017
-1,492
2,525
0
0
-1,492
-1,563
0
0
-60
-1,623
902
1,452
2,353
2019E
51.4
71.7
265.3
12.0
23.4
11.1
7.9
2.1
1.0
5.7
2.1
20.3
17.3
6.7
75
0
0
0.0
2019E
6,030
0
-198
-1,370
0
4,461
-1,531
2,930
0
0
-1,531
-2,121
0
0
-88
-2,209
721
2,353
3,074
Cash Flow Statement
Y/E Mar
Adjusted EBITDA
Non cash opr. exp (inc)
(Inc)/Dec in Wkg. Cap.
Tax Paid
Other operating activities
CF from Op. Activity
(Inc)/Dec in FA & CWIP
Free cash flows
(Pur)/Sale of Invt
Others
CF from Inv. Activity
Inc/(Dec) in Net Worth
Inc / (Dec) in Debt
Interest Paid
Divd Paid (incl Tax) & Others
CF from Fin. Activity
Inc/(Dec) in Cash
Add: Opening Balance
Closing Balance
(INR Million)
25 April 2017
10

Persistent Systems
Corporate profile
Company description
Persistent is a global company specializing in
software product and technology innovation,
partnering with pioneering start-ups, innovative
enterprises and the world’s largest technology
brands. The company staffs over 8,000 employees
and clocked revenues of USD274m (FY14). It has a
clear focus on new initiatives that are witnessing
greater demand and will drive the next wave of
growth in technology - Cloud, Mobility, Data
Analytics and Collaboration.
Exhibit 1: Sensex rebased
Source: MOSL/Bloomberg
Exhibit 2: Shareholding pattern (%)
Mar-17
Promoter
DII
FII
Others
35.0
14.3
24.8
25.9
Dec-16
36.2
13.5
25.7
24.6
Mar-16
38.5
12.0
26.8
22.7
Source: Capitaline
Exhibit 3: Top holders
Holder Name
Saif India Iv Fii Holdings Limited
Shridhar Bhalchandra Shukla
Hdfc Trustee Company Ltd - A/C Hdfc Mid -
Capopportunities Fund
Icici Prudential Value Discovery Fund
Ashutosh Vinayak Joshi
% Holding
5.3
2.0
1.9
1.6
1.4
Source: Capitaline
Note: FII Includes depository receipts
Exhibit 4: Top management
Name
Anand Deshpande
Amit Atre
Designation
Chairman & Managing
Director
Company Secretary
Exhibit 5: Directors
Name
Kiran Umrootkar
Prakash Telang
S K Bhattacharyya
Mritunjay Kumar Singh
Name
Pradeep K Bhargava
Roshini Bakshi
Thomas W Kendra
Source:
Capitaline
Exhibit 6: Auditors
Name
Deloitte Haskins & Sells LLP
Joshi Apte & Co
Type
Statutory
Statutory
*Independent
Exhibit 7: MOSL forecast v/s consensus
EPS
(INR)
FY17
FY18
FY19
MOSL
forecast
37.7
43.9
51.4
Consensus
forecast
38.5
44.5
51.8
Variation (%)
-2.2
-1.5
-0.8
Source: Bloomberg
Source: Capitaline
25 April 2017
11

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Persistent Systems
Disclosure of Interest Statement
Analyst ownership of the stock
No
Served as an officer, director or employee -
No
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PERSISTENT SYSTEMS
25 April 2017
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