Persistent Systems falls as Q1 numbers miss estimates, profit down 9% QoQ

The company is yet to hold its analyst concall, following which brokerages will revise their estimates

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Share price of Persistent Systems fell more than 2.5 percent on July 21, a day after the Pune-based IT company reported 9 percent sequential fall in net profit at Rs 228.8 crore for the quarter ended June.

At 10 am, the stock was quoting at Rs 4,901.85, down 2.8 percent from the previous close. Trading volumes at 4 lakh shares were slightly above the 1-month average volumes.

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Persistent Systems‘ revenue in rupee terms grew by 3 percent QoQ to Rs 2,321.2 crore and topline in dollar terms also increased by 3 percent to $282.90 million for the quarter. The topline and bottom line numbers missed Street estimates.

The order booking for the quarter ended June 2023 was at $380.3 million in total contract value, down 10 percent sequentially.

The EBIT or operating margin declined to 14.9 percent in Q1, missing estimates of flat margins of 15.4 percent reported last quarter. Persistent had earlier said that it expects to improve margins by 200-300 basis points over the next two-three years.

In terms of segment-wise revenue, BFSI grew 6.21 percent QoQ, healthcare and life sciences declined by 2.91 percent QoQ and software, hi-tech and emerging industries grew by 3.23 percent QoQ.

The company is yet to hold its analyst concall, following which brokerages will revise their estimates.

“We will revisit our estimates after the earnings call. Commentary on the near-term outlook, verticals, and margin will be keenly watched. We maintain our Neutral rating on the stock,” said domestic broking firm Motilal Oswal Financial Services in a note.

Not just Persistent Systems, but other midcap IT names Mphasis and Coforge also disappointed the Street with their June quarter results.

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