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"Persistent Systems Undervaluated?"

Kategorie: Blogue

by Siddharth Mehta-Thomas, Beaconsfield Investment Management, advising on ACATIS Investment

Persistent Systems is a mid-tier IT Services company based in India. The company has a revenue of USD 471 million. The company previously outperformed market growth, and reported higher profit margins than peers. The company has an impressive five year average ROE of 25%. To benefit from shift in technology spend towards digital which is a USD 180 billion market growing at 18%, the company has been investing in digital through acquisitions, alliances with companies such as IBM and organic efforts. As of FY18, the digital segment of the business grew by 43%, with 21% of its revenues now deriving from that business. Growth has slowed in recent quarters, leading to the stock price falling by more than 50% and valuation to 5.5 EV/EBITDA on March 2019 earnings (adjusted for USD 185 Million cash, high cash flow generated from operations, No debt). At these valuations the business trades at a deep discount to its peers as well as large cap companies such as Wipro and Infosys.

The stock makes part of our investment fund ACATIS India Value Equities.

Our disclaimer applies to the share report.

Photo: Siddharth Mehta-Thomas



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