The shares of this large-cap company engaged in IT services, dropped by nearly 7 percent per share on Friday after the company’s margins declined in Q1 FY25.
With a market capitalization of Rs.75,373 crores, the shares of Persistent System were trading at Rs.4,590 per share. The stock has given a return of nearly 1500 percent in the past 5 years.
What happened:
Persistent Systems’ net profit declined by 2.9 percent from Rs.315.3 crore in Q4 FY24 to Rs.306.4 crore in Q1 FY25. In contrast, net profit increased year on year by 33.9 percent from Rs.228.7 crores in Q1 FY24 to Rs. 306.4 crores in Q1 FY25.
Similarly, the company’s revenue rose 5.7 percent quarter-on-quarter and 17.92 percent year-on-year.
The profitability ratios of the company have experienced a decline, such as ROCE has declined from 37.5 percent in Q1 FY24 to 34.7 percent in Q1 FY25. Similarly ROE has also reduced from 24.8 percent to 24.2 percent in the same period last year.
Persistent Systems’ stock has experienced a positive return of 79.79 percent year-on-year. Though the EBIT margins have reduced year-on-year by 0.9 percent.
PAT margins of the company have increased 33.9 percent YoY whereas declined 2.8 percent QoQ. The stock of the company is also trading at a high P/E ratio of 64.36 compared to its competitors.
Revenue mix:
The company earns 30.8 percent of its revenue from Banking and Financial Services, 26.7 percent from Healthcare and Life Sciences, 42.5 percent from Software and Hi-Tech Industries.
Persistent Systems generates 80.7 percent of its revenue from North America, 7.8 percent from Europe, 9.8 percent from India, and 1.7 percent from the rest of the world.
Company Profile:
Persistent Systems, headquartered in Pune, is an Indian multinational technology services company.
It focuses predominantly on cloud computing, internet of things, endpoint security, big data analytics, and software product engineering services.
In the June quarter, Persistent Systems signed an agreement to acquire Starfish Associates, strengthening its position in AI powered contact centres and unified communications.
The AI company has also entered into a Strategic Partnership Agreement to drive solutions powered by Google Cloud.
Written by: Siddesh S Raskar
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