- Revenue for the quarter was up 9.1% to Rs 846.2 crore but down 1.4% in dollar terms to $12.08 crore. - EBITDA margin recovered to 19.70% this quarter after declining in previous quarters. EBITDA was up 1.8% QoQ. - Profit after tax was up 4.1% QoQ but flat at 0.1% YoY growth at Rs 91.71 crore. - Digital business revenue grew 6.4% QoQ after soft performance in previous quarters. However, revenue from IBM Alliance and Accelerite segments grew slower than expected.

1. Jainam Share Consultant Pvt Ltd Sector : IT Consulting & Software
VandanaPareek- Assistant Research Analyst (vandana.pareek@jainam.biz); 0261-6725518
IT Consulting & SoftwareResult Update |
Q3FY19 | 01 Feb 2019
Investors are advised to refer through important disclosures made at the last page of the
Research Report.
Jainam Share Consultant research is available on www.jainam.in

2. Jainam Share Consultant Pvt Ltd Sector : IT Consulting & Software
Quarter Update
Q3FY19
Exchange: BSE BSE Code: 533179 Current Market Price: 602.85 Date: 31-Jan-19
Latest Date 31-Jan-19
Latest Price (Rs) 602.85
52 Week High (Rs) 915.00
52 Week Low (Rs) 532.80
Face Value(Rs) 10
Industry PE 20.50
TTM PE (x) 14.15
TTM Period 2018-12
Price/BV(x) 2.03
EV/TTM EBIDTA(x) 7.22
EV/TTM Sales(x) 1.39
Dividend Yield% 1.66
MCap/TTM Sales(x) 1.47
Market Cap (Rs in Cr. ) 4822.80
EV (Rs) 4583.59
Latest no. of shares (in Cr.) 8.00
Source : Ace Analyser, Software
Persistent Systems Ltd.
 Revenue for the quarter was up by 9.1%
i.e. Rs 846.2 crore, while in dollar terms it
was down 1.4% at $12.08 crore.
 Revenue from IP led business increased by
1.7% in rupee term and decreased by 8.1%
in dollar terms i.e. $3.02 crore.
 Segment Revenue - Revenue from
Technology services shown Y-o-Y growth
of 14.6%, while flat Y-o-Y growth form
alliance and Accelerite segment i.e. of
1.27% and -4.2% respectively.
 Doubtful debt provision increased by
223.4% i.e. Rs. 1.68 crore in Y-o-Y terms.
 The Board declared an interim dividend of
Rs 8 per share for 2018-19.
 The board of the company announced a
buyback of equity shares of the company
under open market route for an aggregate
amount not exceeding Rs. 225 crore (10%
of the net worth) at a maximum buyback
price not exceeding Rs 750 per share.
 Digital business which was showing soft
performance in few last quarter got
accelerated in this quarter and grew by
6.4% Q-o-Q.

3. Jainam Share Consultant Pvt Ltd Sector : IT Consulting & Software
Result Highlights
 EBITDA Margin for the current year was robust as in current quarter it was 19.70% which
means recovered by 2.50% (excluding the exchange loss) this quarter. EBITDA for the quarter
stood at Rs. 146.30 crore i.e. a growth of 1.80% Q-o-Q.
 Revenue for the quarter in USD term was US$12.08 Crore, growth of 2.2% Q-o-Q whereas
declined by 1.4% Y-o-Y. Revenue in INR term was Rs. 864.24 Crore, growth of 3.4% Q-o-Q and
9.1% Y-o-Y.
 Profit after tax for the quarter was Rs. 91.71 crore which is 10.60% of revenue, increase of
4.1% Q-o-Q and 0.10% Y-o-Y.
 ISV revenue which contribute 39.80% percent of business improved in this quarter as it grew
by 3.2% Q-o-Q and 1.9% Y-o-Y.
 Enterprise segment is 35.20% of total business in revenue term increased by 3.30% Q-o-Q and
was flat in Y-o-Y term.
 IP-Led business contribute 25% towards the revenue and it showed flat revenue during the
quarter and is decline by 8.1% on Y-o-Y basis.
 Forex loss during the quarter Rs. 24.08 crore it impacted the PAT of the company and other
income was Rs. 22.90 crore.
 SG&A expense for the quarter was Rs. 159. crore as compared to Rs. 151.00 crore which was
increased by 5.9% on Q-o-Q basis and 4.1% on Y-o-Y basis which is stable.
 Segment Revenue :
 Services : Service sector contribute 42% towards the revenue which showed flat growth
this quarter with -0.40% Q-o-Q change.
 Digital : This sector contributes 22% towards the revenue front. Growth in digital
segment saw a recovery and continuation of strong growth from digital front is expected
by management.
 Alliance : Revenue from IBM Alliance is 29.4% of revenue and it showed a slow of 1.9%
Q-o-Q and is declined by 2% Y-o-Y. So, not so exciting growth from Alliance front as Q3 is
usually considered as the strongest quarter for IBM CE/CLM.
 Accelerite : Accelerite its own product which 5.8% of its revenue was increased by 7.8%
Q-o-Q but was disappointingly down by -12% Y-o-Y.

4. Jainam Share Consultant Pvt Ltd Sector : IT Consulting & Software
Concall Highlights
 Deal size in digital segment remain small in range of USD 0.05 Cr. To USD 0.35 Cr. Same as one
year ago. They expect continuous growth momentum in digital segment with addition of two
new client of size more than USD 0.3 crore. Management expect 25-30% Y-o-Y growth in this
segment led by current pipeline customers, new customers. 25 new customer were added
during the quarter in which several are from mark new logos.
 IL&FS Exposure : Persistent had corporate FDs of Rs. 43 crore with IL&FS. Maturity of these
deposit is from January 2019 to June 2019, the first deposit due was on 28th
January 2019.
Persistent is expecting recovery of the amount due to government intervention in this case
and transparent sale of selected asset under the leadership of newly appointed IL&FS board.
At this stage they are finding it difficult of estimate the probable loss if any.
 Persistent is not seeing any issue related to HCL taking platform from IBM with whom
company already have alliance.
 Capital Allocation : Buyback by the Company of its fully paid-up equity shares having face
value of Rs.10 each at a price not exceeding Rs. 750 per Equity Share and for an aggregate
amount not exceeding Rs. 2,25 Crore ,from the shareholders of the Company excluding
promoters, promoter group and persons who are in control of the Company, payable in cash
via the "open market" route. The number of share to be bought back would be 30,00,000
which are 3.75% of the total number of paid-up equity shares of the company. The Board has
also declared an interim dividend of Rs 8 per share for 2018-19.
 New CEO hiring process is going on and in next two month the person will be on the board. Dr.
Deshpande will be in active role post the appointment as chairman of the company.
 Management expect to maintain margin at current level for FY20 by demanding higher rate in
partnership led businesses, increasing it offshore mix which will benefit its margin by
increasing investment in sales, new talent hiring and employee retention in the constrained
market.
View
 We are “neutral” on this stock as revenue from IBM Alliance are not so exciting growth from
Alliance front even revenue from Accelerite business was also disappointing.

5. Jainam Share Consultant Pvt Ltd Sector : IT Consulting & Software
Financial Information
Profit & Loss Q3FY19
Particulars Dec-18 Dec-17 Var %
Net Sales 864.25 791.89 9.14%
Total Expenditure 718.02 654.37 9.73%
Operating & Manufacturing 227.09 175.66 29.28%
Employee Cost 490.93 478.72 2.55%
PBIDT (Excl OI) 146.23 137.52 6.33%
Other Income 22.99 19.28 19.28%
Operating Profit 169.22 156.79 7.93%
Interest 0.07 0.01 378.57%
PBDT 169.15 156.78 7.89%
Depreciation 39.63 39.26 0.94%
PBT 129.52 117.52 10.22%
Tax 37.80 25.85 46.27%
PAT 91.72 91.67 0.05%
Diluted EPS 11.46 11.46 0.00%

6. Jainam Share Consultant Pvt Ltd Sector : IT Consulting & Software
Balance Sheet Q3FY19
Initiate Coverage : Persistent Systems Ltd.
Particulars March 2018 December 2018
Assets
Non-current assets
Property, plant and equipment 258.13 240.83
Capital work in progress 0.77 0.86
Goodwill 7.66 8.20
Other intangible assets 250.83 213.88
Financial assets 306.12 408.86
Other Assets 73.35 79.45
Current Assets
Financial Assets 1594.26 1834.34
Other Assets 179.69 163.64
Total Assets 2670.81 2950.06
Equity & Liabilities
Equity 2127.20 2387.54
Non current liabilities
Financial Liabilities 1.66 1.33
Provisions 15.97 16.85
Other Liabilities 27.04 31.57
Current Liabilities
Financial Liabilities 206.94 207.46
Provisions 159.95 133.58
Other Liabilities 132.05 171.73
Total Equity & Liabilities 2670.81 2950.06

7. Jainam Share Consultant Pvt Ltd Sector : IT Consulting & Software
Source
 Company Conference Call
 Ace Equity
 Persistent Fact-sheet
 Persistent System Ltd. - Website
Name Designation Email Id
Tejas Jariwala Research Head tejas.jariwala@jainam.in
Jimit Zaveri Sr. Research Analyst jimit.zaveri@jainam.biz
Vaishali Patel Sr. Research Analyst vaishalip.patel@jainam.biz
Karan Agarwal Assistant Research Analyst karan.agarwal@jainam.biz
Vandana Pareek Assistant Research Analyst vandana.pareek@jainam.biz
Riva Patel Assistant Research Analyst riva.patel@jainam.biz
Radhika Modi Assistant Research Analyst radhika.modi@jainam.biz
Shahrukh Nalbandh Sr. Research Executive shahrukh.nalbandh@jainam.biz
Drashti Patel Jr. Research Executive drashti.patel@jainam.biz
Dhruvish Bakshi Jr. Research Executive dhruvish.bakshi@jainam.biz
Research Analyst Details:

8. Jainam Share Consultant Pvt Ltd Sector : IT Consulting & Software
Disclaimer
Research Analyst Details
Name: Vandana Pareek Email Id: vandana.pareek@jainam.biz Ph: +91 0261-6725518
Analyst ownership of the stock: No
Details of Associates: Not Applicable
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