Persistent Systems
BSE SENSEX
27,803
S&P CNX
8,541
24 July 2016
1QFY17 Results Update | Sector: Technology
CMP: INR658
TP: INR710 (+8%)
Neutral
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IBM-Watson IoT deal drives revenue growth
…But likely to weigh on profitability in the current year
In-line performance…:
Revenue growth of 4.3% QoQ to USD105m was in-line with our
estimate. Profitability too was in-line as EBITDA margins declined by 80bp QoQ to
15.1% - led by visa expenses and additional costs associated with the IBM-Watson IoT
deal. However, the decline in EBIT margins was more severe (-190bp QoQ to 10.2%) as
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
Free float (%)
PSYS IN
80
50.7 / 0.8
797 / 563
-9/-2/5
70
61.9
amortization expense increased by 34% QoQ and 51% YoY because of the change to
IND-AS and subsequent increase in the value of intangible assets.
…but varying composition of revenue:
During the quarter, the IBM-Watson IoT deal
had revenue of USD11.5m and Citrix reported USD2m. Excluding the incremental
addition from these two, revenue was flat during the quarter. Growth in ISVs was
strong at 3.4% QoQ (versus 0.1% CQGR over FY16) and Enterprise saw a rebound (5.9%
QoQ versus 1.8% in the previous quarter). The sharp decline in IP revenue (ex. IBM and
Citrix) of ~13% QoQ weighed on growth.
Financials & Valuations (INR b)
2016 2017E
Y/E Mar
23.1
29.9
Net Sales
4.2
4.7
EBITDA
3.0
3.0
NP
37.2
37.7
EPS (INR)
2.3
1.5
EPS Gr. (%)
211.0 238.3
BV/Sh. (INR)
19.5
17.3
RoE (%)
18.9
16.9
RoCE (%)
17.8
17.5
Payout (%)
3.1
2.8
Div. Yield
2018E
35.1
5.8
3.8
47.4
25.7
250.3
20.0
15.8
13.9
2.6
FY17 margins to remain a pain-point:
The costs associated with the IBM deal are front-
ended and are expected to weigh upon margins to the tune of 200bp in FY17. Margins
would face the headwind of wage hikes in 2Q; although a lot of it can be offset by
traditional levers. The structural recovery to margins would only begin once revenue
from the IBM deal reached a point where it exceeds the cost associated with it, which
is likely to be back-ended; resulting in a full-impact in FY18E.
…which keeps rerating in check:
The IBM deal and traction in the Enterprise segment
has waned some of the revenue growth pressures on PSYS, leading to visibility of
strong revenue growth over FY16-18E (20% revenue CAGR). While the deal provides
potential of earnings accretion in the year beyond, at 18/14x FY17/18E, valuation
upside at PSYS would be constrained by near-term pressures. Moreover, ISVs (ex. IBM)
continue to weigh on overall performance. Our revised target price of INR710 (post
~4% earnings cut in FY17/18E) discounts FY18E earnings by 15x.
Neutral.
Estimate change
TP change
Rating change
Quarterly Performance (Consolidated)
; *IND-AS
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
1QFY17: Revenue driven by IBM-Watson IoT deal and Citrix
PSYS’ 1QFY17 revenues grew 4.3% QoQ to USD104.8m (estimate of 4.5% QoQ).
The growth included additional revenue from the IBM-Watson IoT deal and part
integration of recently acquired Citrix.
The total contribution from the IBM-Watson IoT deal during the quarter was
USD11.5m (versus USD8m in 4QFY16). The incremental revenue from this deal
was for a tad less than a month. The contribution from Citrix was USD2m in 1Q.
Excluding the incremental contribution from these two factors, overall revenue
was flat sequentially.
Exhibit 1: Progress in the IBM Watson IoT deal reflecting in overall revenue growth
Revenue (USD m)
8.6
1.5
63
68
2.2
3.9
0.0
73
73
76
5.0
4.2
80
0.6
79
-1.8
80
83
5.5
90
100
Revenue Growth QoQ (%)
8.1
4.3
105
12.0
70
Source: Company, MOSL
Volumes in the linear business grew by 2.4% QoQ, with onsite volumes
increasing by 0.6% and offshore volumes increasing by 2.7% QoQ.
Onsite billing rates are 3.6x that at offshore for PSYS. Onsite pricing was up 5.9%
QoQ at USD15,437 per person month (PPM) while offshore pricing was up 1.2%
QoQ to USD4,325 PPM.
In Rupee terms, revenue was INR7b, +3.6% QoQ, in line with our estimate.
Average realized currency rate during the quarter was INR67, v/s our estimate
of INR66.89.
Exhibit 2: IP-led revenues declined excluding the addition of IBM Watson IoT and Citrix
IP business revenue (USD m)
37.4
9.5
-12.4
13.1
12.4
-4.8
14.2
14.4
2.1
14.5
15.0 15.1
2.9
1.0
14.5
-4.1
14.5
-0.1
13.4
-7.1
18.0 28.3
29.5
QoQ growth (%)
34.1
57.2
4.3
Source: Company, MOSL
EBITDA margin was 15.1%, -80bp QoQ, in line with our estimate. Gross margin
fell by 100bp to 34.7% and SGA was down 30bp QoQ to 19.8%.
24 July 2016
2

Persistent Systems
EBITDA margins in 1Q had headwinds from visa expenses, drop in IP revenue
because of seasonality, additional costs associated with the IBM-Watson IoT
deal and provisioning for doubtful debts (which saw a reversal in 4QFY16).
Exhibit 3: EBITDA margin lower because of visa expenses and costs related to the IBM deal
EBITDA Margin (%)
8.9
8.8
8.9
7.6
27.0
21.8
20.6
20.1
20.2
19.4
18.7
18.8
15.9
9.0
9.4
9.9
S&M (%)
10.2
9.9
9.7
9.1
8.6
8.1
21.7
26.0
27.7
15.1
Source: Company, MOSL
The company is likely to face the pressure of wage hike in 2Q; but the tailwinds
of additional revenue from the IBM-Watson IoT deal, absence of visa expenses
and increase in onsite utilization are likely to partly offset this headwind.
Onsite utilization has been low over the last few quarters because of the ramp
up in Enterprise and the IBM deal. As these areas start to pick-up, onsite
utilization has the potential to be optimized.
Exhibit 4: Onsite utilization has potential to improve
Offshore Utilization %
95
90
85
80
75
70
65
60
84.9
68.8
89.4
85.9
71.8
86.9
88.0
89.7
88.6
72.9
Onsite Utilization %
89.2
73.2
84.7
71.6
87.4
74.6
86.6
72.8
85.9
73.6
84.2
74.0
70.3
67.7
65.9
68.4
Source: Company, MOSL
Forex gains during the quarter were INR81m v/s losses of INR36m in 4QFY16,
and our expectation of gains of INR48m.
However, Other Income at INR172m, was lower than INR245m in 4QFY16 and
higher than our estimate of INR131m.
Effective tax rate during the quarter was 24.3%, lower than our estimate of
25.5%. Consequently, PAT at INR733m was below our estimate of INR744m.
Revenue growth in ISVs was 3.4% QoQ, driven by additional revenue from top
client. Revenue from this segment had been under pressure till 4QFY16, as it
clocked a four-quarter CQGR of -0.1%, despite addition to revenue growth by
the acquisition of RGEN in 2Q.
Segment-wise performance: ISVs and Enterprise drive growth
24 July 2016
3

Persistent Systems
Enterprise grew by 5.9% QoQ compared to 4QFY16 growth of 1.8% QoQ.
Traction in this segment has relatively weakened over the last two quarters.
IP revenues grew by 4.3% QoQ. In 1Q, excluding the incremental revenue from
the IBM-Watson IoT deal and the full integration of Citrix, IP revenue declined
by ~13% QoQ.
In 4QFY16, excluding revenue from the IBM Watson IoT deal and the part-
integration of Citrix, IP revenue grew by ~13% QoQ. A similar trend was seen in
3QFY16, where excluding the acquisition of Aepona, IP revenue grew by ~15.5%
QoQ.
Contri.
Rev. (%)
45.4
26.4
28.2
to Growth
QoQ (%)
3.4
5.9
4.3
- 4 Qtr
CQGR (%)
1.5
9.4
19.5
Source: Company, MOSL
Exhibit 5: IP declined excluding IBM and Citrix
Industry Classification
ISV
Enterprise
IP Led
Growth during the quarter was driven by North America (5.4% QoQ) and RoW
(13% QoQ), while Europe remained under pressure. RoW (mainly India and
APAC) has been a volatile segment for PSYS over the last few quarters.
Contri. to
Rev. (%)
87.0
5.2
7.8
Growth –
QoQ (%)
5.4
-19.0
13.0
4 Qtr
CQGR (%)
8.3
2.4
2.8
Source: MOSL, Company
Exhibit 6: RoW remains volatile
Geographies
North America
Europe
RoW
Top client grew for the fifth consecutive quarter, after four successive quarters
of decline, and was a key positive during the quarter, indicating a sustained
growth trajectory. 2-5 clients grew by 6.3% QoQ and 6-10 declined by 5.2%
QoQ. Non-top 10 accounts declined by 2.1% QoQ.
Contri.
Rev. (%)
29.0
15.7
8.0
to Growth
QoQ (%)
19.1
6.3
-5.2
- 4
CQGR (%)
20.9
4.0
2.7
Source: MOSL, Company
Qtr
Exhibit 7: Strong growth in top client – a key positive during the quarter
Client Metrics
Top Client
Top 2-5 Clients (%)
Top 6-10 Clients (%)
Change in estimates
Revenue from the IBM Watson IoT deal commenced during 4QFY16 and added
~USD8m in revenue. In 1QFY17, it added ~USD11.5m as it got integrated for the
full quarter. The deal is expected to bring in revenue of ~USD50m in FY17.
However, costs associated with the deal are expected to be front-ended.
In the last two quarters, EBITDA margins have eroded by 370bp, a major part of
which can be attributed to the costs related to the IBM deal. While the company
will face the headwinds of wage hikes in 2Q, this can be partly offset by absence
of visa expenses; improved onsite utilization; better blended pricing because of
4
24 July 2016

Persistent Systems
the IBM deal and Aepona acquisition; and higher revenue from the IBM deal
leading to better profitability on incremental revenue.
Our USD revenue and EBITDA margin estimates have largely remain unchanged
because of the in-line quarter. However, Depreciation & Amortization expenses
increased by 34% QoQ and 51% YoY as the company had to recognize additional
amortization relating, majorly contributed by the acquisition of RGEN and
product purchases related to the IBM deal.
Consequently, we have cut our earnings estimate by 4.3/4.0% for FY17/18E.
Exhibit 8: Change in estimates
Revised
FY16
FY17
FY18
65.8
67.8
70.0
351.7 441.7 502.1
14.0
25.6
13.7
18.0
15.6
16.6
37.2
37.7
47.4
FY16
65.8
351.7
14.0
18.0
37.2
Earlier
FY17
67.7
442.5
25.8
15.6
39.4
FY18
70.0
502.1
13.5
16.6
49.4
FY16
0.0%
0.0%
0bp
0bp
0.0%
Change
FY17
FY18
0.0%
0.0%
-0.2% 0.0%
-20bp 20bp
0bp
0bp
-4.3% -4.0%
INR/USD
USD Revenue - m
USD revenue gr.
EBITDA Margin (%)
EPS - INR
Source: MOSL, Company
Valuation and view: Remain positive on business; Neutral on valuations
In Tier-II IT, we prefer PSYS’ business fundamentals, given the following factors:
One of the few Tier-II companies with the potential to grow revenues above
the industry given the focus on Enterprise Digital Transformation.
Unlikelihood of obsolescence in its chosen segments over the medium to
long term; and multi-year relationships, with marquee clientele in the ISV
space.
Credible experience in agile product development and iterative approach to
Product Engineering – two very relevant trends in today’s market
Strong balance sheet and adequate pricing power in the set of offerings
PSYS’ arrangement with IBM for its IoT Watson product may weigh on the
company’s performance in FY17, but has the potential to be significantly
earnings accretive beyond the next year. It lends strong revenue visibility from
PSYS’ top client; and a healthy growth in Watson’s IoT product sales would have
a direct bearing on PSYS’ revenues and profitability.
Based on the business model, financial performance and presence in potentially
high growth areas, there is a case for PSYS to be values at a premium multiple to
its tier-II peers. Including the likely changes in financial performance on account
of the deal, we expect PSYS to grow its revenues at a CAGR of 19.5% over FY16-
18 and earnings at a CAGR of 12.9% over the same period. Although the concern
around revenue growth has been addressed by the new IBM deal, margins have
taken a clear hit, and are expected to keep them burdened despite the
aggressive use of some of the levers.
The stock trades 17.5/13.9x FY17/18E Earnings. We expect restrictions to uptick
in valuations till margin pressures ease out, and the Enterprise segment picks up
meaningfully again. Our revised price target of INR710 discounts FY18E earnings
by 15x, which implies 8% upside to CMP. Neutral.
Key triggers
Better-than-estimated margins from aggressive exercise of levers
5
24 July 2016

Persistent Systems
Sharper growth in IBM Watson IoT
Strong rebound in Enterprise growth
Key risk factors
Continued revenue sluggishness in ISV segment (ex-IBM)
Pressure on margins from higher S&M to sell products / investments in latest
collaboration with top customer
Decline in discretionary activity
Exhibit 10: 1-year forward PB band
Avg(x)
Min(x)
24.4
5.0
4.0
3.0
15.1
6.7
2.0
1.0
2.3
1.2
2.7
PB (x)
Peak(x)
Avg(x)
4.3
Min(x)
Exhibit 9: 1-year forward PE band
30
25
20
15
10
5
12.8
PE (x)
Peak(x)
Exhibit 11: Comparative valuation
Mkt cap Rating TP (INR) Upside
EPS (INR)
P/E (x)
RoE (%)
FY16-18E CAGR (%)
(USD b)
(%) FY16 FY17E FY18E FY16
EPS
FY17E FY18E FY16 FY17E FY18E USD rev.
Mphasis
1.7 Neutral
560 3.5
34.5 38.1 42.4
15.7
14.2
12.8 12.3 12.8 14.0
6.1 11.0
Mindtree
0.7 Neutral
600 7.7
35.9 32.5 42.5
15.5
17.1
13.1 27.4 21.4 24.3
14.5 8.9
KPIT Tech
0.4 Neutral
160 18.5
14.1 13.7 16.0
9.6
9.8
8.4 21.0 18.0 17.5
4.3 6.6
Cyient
0.8 Buy
550 13.2
30.7 34.2 41.6
15.8
14.2
11.7 16.5 16.2 17.4
12.9 16.4
Hexaware
1.0 Neutral
230 2.7
12.9 13.3 14.9
17.3
16.9
15.1 28.9 27.3 28.8
10.1 7.2
NIIT Tech
0.4 Neutral
530 14.2
45.8 41.3 53.4
10.1
11.2
8.7 19.0 15.2 17.4
7.8 8.0
Persistent Sys.
0.8 Neutral
710 7.6
37.2 37.7 47.4
17.8
17.5
13.9 19.5 17.3 20.0
19.5 12.9
Zensar
0.7 Buy
1,300 31.2
68.2 77.0 98.0
14.5
12.9
10.1 24.0 22.3 23.9
8.4 19.8
Source: Company, MOSL
Company
24 July 2016
6

Persistent Systems
Story in charts
Exhibit 12: Aggressive foray in IP-led revenues...
IP led revenues (USD m)
123.8
59.1
19.9
74.2
Growth (%)
Exhibit 13: … and strong traction in Enterprise business…
Enterprise revenues (USD m)
17.4
8.9
5.0
25.7
14.4
16.9
18.4
19.3
19.3
0.3
22.1
25.6
14.1
16.2
26.1
1.8
QoQ (%)
61.1
22.8
9.2
FY10
14.9
FY11
18.3
FY12
40.9
FY13
49.3
20.5
5.9
27.7
FY14
FY15
FY16
Source: Company, MOSL
Source: Company, MOSL
Exhibit 14: …have offset sluggish ISV business (~45% of rev)
ISV Revenues (%)
60.3
58.3
57.9
57.8
57.0
57.2
51.3
Exhibit 15: Access to market is key to scale – beefed up
front-end hiring in recent quarters
Sales personnel
224 216
208 203 201 204
202 212 208
45.8
45.4
139 150
119 128
Source: Company, MOSL
Source: Company, MOSL
Exhibit 16: Turnaround in linear revenues is key to 20%+
growth…
Revenue (USD m)
Growth (%)
25.6
14.7
15.2
Exhibit 17: …and continued IP traction is crucial to
profitability uptick
PAT (INR m)
25.9
23.4
25.8
EBITDA margin (%)
12.6
14.0
13.7
20.4
20.7
18.0
16.6
3794
237.8
FY13
274.1
FY14
308.5
FY15
351.7
FY16
441.7
FY17E
502.1
FY18E
1397
FY11
1431
FY12
1876
FY13
2493
FY14
2906
FY15
2974
15.6
3018
FY16 FY17E FY18E
Source: Company, MOSL
Source: Company, MOSL
24 July 2016
7

Persistent Systems
Exhibit 18: Operating metrics
4QFY14
Segments (%)
Services
Digital
Alliance
Accelerite
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
47.6
14.2
30.0
8.2
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
85.4
6.1
8.5
85.9
6.5
7.6
86.1
6.3
7.7
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
60.3
19.8
20.0
58.3
22.1
19.6
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
21.4
59.0
19.6
23.1
56.9
20.0
24.5
55.9
19.6
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
21.1
18.3
9.1
261
358
15
36
85.2
63
20.8
17.9
10.3
260
347
14
38
86.7
69
19.0
17.1
8.9
281
376
14
41
83.6
65
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
7,349
150
358
7,857
16,155
1,246
14,909
69.2
86.9
67.7
13.4
2,343
3,927
14,355
4,241
7,271
202
403
7,876
16,139
1,283
14,856
67.7
88.0
65.9
14.0
2,419
3,915
14,905
4,219
7,447
212
408
8,067
16,015
1,403
14,612
70.3
89.7
68.4
14.1
2,496
4,123
14,864
4,271
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
Source: MOSL, Company
24 July 2016
8

Persistent Systems
Financials and Valuations
Key assumption
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 (%)
2011
45.6
170.2
155.4
14.9
6,360
1,698
26,766
71.0
2011
7,758
29.1
1,583
20.4
424
1,159
0
344
0
1,504
108
7.2
0
1,396
1,396
21.3
2011
435
7,036
7,471
0
-60
7,441
4,543
2,281
2,261
605
2,500
3,677
0
1,582
1,000
1,095
1,602
1,206
396
2,075
7,441
2012
48.2
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
2017E
67.8
441.7
312.5
129.2
9,929
665
44,484
74.6
2017E
29,929
29.4
4,660
15.6
1,407
3,253
2018E
70.0
502.1
353.2
148.9
10,735
806
46,772
75.1
2018E
35,147
17.4
5,841
16.6
1,453
4,388
Income Statement
(INR Million)
0
782
0
4,035
1,017
25.2
0
3,018
3,018
1.5
2017E
800
17,717
18,517
36
-473
18,205
13,471
7,982
5,490
265
0
17,686
0
5,166
10,235
2,286
5,236
4,428
808
12,451
18,205
0
704
0
5,092
1,299
25.5
0
3,794
3,794
25.7
2018E
800
18,643
19,443
36
-473
19,132
13,771
8,339
5,433
265
0
18,769
0
5,404
11,079
2,286
5,335
4,632
703
13,434
19,132
Balance Sheet
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
(INR Million)
24 July 2016
9

Persistent Systems
Financials and Valuations
Ratios
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)
2011
17.1
22.2
96.2
2.8
16.1
2012
17.7
25.5
108.2
3.0
16.9
2013
23.5
33.2
131.1
4.5
19.2
2014
31.2
44.0
157.3
6.0
19.3
2015
36.3
48.1
180.9
10.0
27.5
18.2
13.7
3.6
2.3
11.0
1.5
20.1
16.5
3.8
75
0
0
0.0
2011
1,583
-81
-460
-108
0
935
-971
-37
-939
0
-1,910
19
0
0
90
109
-866
1,866
1,000
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
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
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
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
17.8
13.4
3.1
1.9
10.5
1.7
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
2017E
37.7
55.3
238.3
12.0
31.8
17.5
11.9
2.8
1.4
8.8
1.8
17.3
16.9
6.1
75
0
0
0.0
2017E
4,660
0
139
-1,017
0
3,781
-2,534
1,247
1,348
0
-1,186
267
10
0
-379
-101
2,494
7,741
10,235
2018E
47.4
65.6
250.3
12.0
25.3
13.9
10.1
2.6
1.1
6.9
1.8
20.0
15.8
6.4
75
0
0
0.0
2018E
5,841
0
-139
-1,299
0
4,403
-1,396
3,008
0
0
-1,396
-1,707
0
0
-457
-2,164
844
10,235
11,079
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)
24 July 2016
10

Persistent Systems
Corporate profile
Company description
Exhibit 1: Sensex rebased
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.
Source: MOSL/Bloomberg
Exhibit 2: Shareholding pattern (%)
Mar-16
38.5
12.0
26.8
22.7
Promoter
DII
FII
Others
Dec-15
38.5
26.4
12.9
22.2
Mar-15
38.6
9.8
22.5
29.2
Source: Capitaline
Exhibit 3: Top holders
Holder Name
Saif Advisors Mauritius Limited A/C Saif India
Iv Fii Holdings Limited
Nordea 1 Sicav - Emerging Stars Equity Fund
Shridhar Bhalchandra Shukla
HDFC Trustee Company Ltd - A/C HDFC Mid -
Capopportunities Fund
ICICI Prudential Value Discovery Fund
% Holding
5.3
2.9
2.0
1.9
1.6
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
Anant Jhingran
Pradeep K Bhargava
Roshini Bakshi
Mritunjay Kumar Singh
Name
Kiran Umrootkar
Prakash Telang
S K Bhattacharyya
Thomas W Kendra
Source: Capitaline
*Independent
Exhibit 6: Auditors
Name
Deloitte Haskins & Sells LLP
Joshi Apte & Co
Type
Statutory
Statutory
Exhibit 7: MOSL forecast v/s consensus
EPS
(INR)
FY17
FY18
MOSL
forecast
37.7
47.4
Consensus
forecast
41.9
50.8
Variation (%)
-10.0
-6.6
Source: Bloomberg
Source: Capitaline
24 July 2016
11

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Persistent Systems
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No
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