Persistent Systems sees growth picking up in BFSI healthcare sectors

Venkatesh Ganesh Mumbai | Updated on August 05, 2020 Published on August 05, 2020

Christopher O’Connor, CEO & Executive Director, Persistent Systems

Expects to grow 2-4% in the remaining 3 quarters

Outsourcing company Persistent Systems has said that it expects to grow 2-4 per cent in the remaining 3 quarters, but is cautiously optimistic on tech spending due to continued Covid-19 related headwinds faced by its clients.

The company clarified that this is not a guidance but is a target, which could see it closing the year at a revenue growth of 6-12 per cent. “While we are cautiously optimistic, there is a momentum from clients on adopting tech in new business areas,” Christopher O’Connor, CEO & Executive Director, Persistent Systems, told BusinessLine.

Persistent’s optimism comes from improved June-ended quarter numbers. It reported profits of ₹90 crore, a 9.2 per cent increase when compared to ₹82.4 crore posted in the year-ago period. In the March-ended quarter, the company had reported a dip in profits and sequentially this was an increase of 7.4 per cent.

Revenues for the June-ended quarter were ₹991.3 crore, a 19 per cent rise when compared to ₹832.1 crore posted in the year-ago period. This revenue growth is more or less in line with other mid-size companies in the sector such as Hexaware and Mphasis. Sequential revenue growth was 3.1 per cent.

The growth, according to O’Connor, was primarily due to increased uptake in BFSI and healthcare sectors. “Companies are seeking suggestions on how to adopt technology to augment their business as they are facing topline and bottomline pressures,” he said.

This resulted in EBITDA growth for the company, which rose 21.8 per cent on a yearly basis to ₹146.4 crore. These margins can be sustained going forward, said O’Connor.

Bullish on remaining quarters

Persistent continues to be bullish for the remaining quarters, on the back of what it has seen in Q1. It has bagged customers in the healthcare segment wherein O’Connor sees demand for AI increasing especially tele-medicine is increasingly getting adopted in hospitals.

In the quarter, Americas grew 3.4 per cent and Europe 20 per cent on a sequential basis. While Persistent does not give out Annual Contract Value or deal pipeline numbers, it said that it had a healthy deal pipeline. Over the medium term, Persistent should be a key beneficiary of the Covid-led increase in digital services’ uptake, given its high exposure to consulting, hi-tech and other stable verticals such as healthcare and BFSI, noted an Motital Oswal report.

Recent improvement in execution and higher focus on annuity revenue should offset any volatility in the IP segment, as per Emkay Research. While revenue from top accounts declined 4.9 per cent sequentially but the impact was offset by a 6.8 per cent growth in top 2-5 accounts.

Promoters held 31.5 per cent stake in the company as of June 30, 020, while FIIs held 19.2 per cent, DIIs 27.2 per cent and public and others 22.1 per cent. Its shares closed at ₹950, flat when compared to previous day’s close.

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Published on August 05, 2020
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