Persistent systems ltd.

Jainam Share Consultant Pvt Ltd. Sector : IT Consulting & Software
VandanaPareek- Research Analyst (vandana.pareek@jainam.in); 0261-6725518
IT Consulting & SoftwareResearch Note |
31 Dec 2018
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

Index
A. Company Overview
1. About……………………………………………………….…………….…….3
2. Investment Rationale……………………………………….…………………4
3. Risk………………………………………………….………………………….4
B. Industry Overview
1. Software Industry….….……………………………………………..………………………………….7
C. Business of the Company
1. Business Segmentation……..………….…………………….………….……..8
2. Industry Classification.…………………………………………………….….11
3. Geographic Distribution…………………………….………………………...12
4. Top Shareholders…………………………………..…………………………13
5. Management………………………………………………………………….13
D. Financial Outlook
1. Balance Sheet……………………………….……………….….……………..16
2. Profit & Loss…………………………………….………….………...………….17
3. Cash Flow Statement…………………………………………………..………17
4. Ratio………………………………………..….………………………………18
E. Analysis
1. Peer Analysis………………………………………………………………….19
2. Valuation………………………………………………………………………20
F. Conclusion
1. Recommendation…………………………………….………………………..22
2. Sources……………………………………………….………………………..23
3. Full Form & Glossary………………………………………………………….24
4. Report Gallery………………………………………………………………….25
5. Disclaimer……………………………………………………………………..26

12/31/2018 3
Company Overview
About
Exchange: BSE BSE Code: 533179 Current Market Price: 632.20 Date: 31-Dec-18
Latest Date 31-Dec-18
Latest Price (Rs) 632.20
52 Week High (Rs) 915.00
52 Week Low (Rs) 532.80
Face Value(Rs) 10.00
Industry PE 19.51
TTM Period 2018-09
Price/BV(x) 2.21
EV/TTM EBIDTA(x) 7.73
EV/TTM Sales(x) 1.50
Dividend Yield% 1.58
MCap/TTM Sales(x) 1.57
Market Cap (Rs in Cr. ) 5056.00
EV (Rs) 4816.79
Latest no. of shares (in Cr.) 8.00
Source : Ace Analyser, Software
Persistent Systems Ltd.
Persistent system was established on May 30,
1990, by Dr. Anand Deshpande. Persistent
Systems is a global company specialised in
software product and technology services. It is
an Outsourced Product Development specialty
company, offering the customers the benefits
of offshore delivery. It designs, develops and
maintains software systems and solutions,
creates new applications and enhances the
functionality of the customer’s existing
software products. It delivers services across
all stages of the product life-cycle, which
enables it to work with a wide-range of
customers and allows it to develop, enhance
and deploy its customers’ software products.
Persistent has customers spread across North
America, Europe, and Asia.
Persistent focuses on developing best-in-class
solutions in four key next-generation
technology areas: Cloud Computing, Mobility,
Software Analytics and Software Collaboration.
They are focusing on three industry markets
 Financial Services,
 Healthcare & Life Sciences and
 Industrial IoT.
The Group has organised itself into four
business units:
 Services
 Digital
 Alliance
 Accelerite (Products).

12/31/2018 4
Investment Rationale
 Focus on Digital Business : Over the last three years, Persistent Systems is focusing on
digital business, which has helped it build capabilities in key technology areas as it transforms
to software-driven businesses. Persistent system digital segment contributes 22% of overall
revenue. Company is seeking a good pipeline projects in digital and is expecting digital
business to rebound to growth from HY2FY19 onwards.
 Focus on New and Emerging Technology: Company’s current focus areas
include blockchain, genomics, intelligent business automation, and machine learning. This will
drives there focus to the newest and the next waves of disruptive technologies.
 Shift in Business Model: Persistent system created its name from Outsourced Product
development and now it has shifted its business model from offshore software product
development services to partnership-led platform-based and intellectual property offerings,
which sets the Company apart from other Indian technology companies. As per Morgan
Stanley, the change in business model will help the Company improve its margins by
approximately 200 basis points over the next three years.
 Inorganic Growth: Persistent system is now focusing more on acquiring entities to expand
its geographical reach rather than just acquiring assets and has done partnership with IBM to
work on IoT (Internet of Things).
 Entry into Health-care Sector: Healthcare sector is the driving force of Software Industry
in the coming year. Persistent System has moved towards the heathcare sector as it has
customers like Swancare, Mount Sian. Persistent Systems acquired Herald Health, for
transforming healthcare data overload into clear and actionable insights.
 Appointment of new MD: Persistent will require separate position of Chairman and MD .
New MD will be an external candidate who will focus on sales.
Risk
 Currency Volatility: Company derives 93% of total business apart from India and out of
which 83% of the business arise from US, hence any currency volatility could impact its
margins and major parts of its expenses is incurred in INR.
 Revenue Concentration: Revenue from top 10 clients is more than 50%, so loss of a big
client can cause disturbance in its earning.
Revenue
Concentration
2017-18 2016-17 2015-16 2014-15 2013-14
Top 1 25.90% 28.30% 19.90% 18.40% 21.20%
Top5 43.90% 44.60% 36.60% 35.80% 37.10%
Top 10 53.50% 53.10% 45.50% 45.20% 47.00%

12/31/2018 5
 Project Closure: Decline in revenue from digital business due to closure of one project - as
there was mismatch in of clients expectation and vs what the company delivered.
 Stiff Competiton: Company is facing stiff competition from other large and small software
companies in India and they have lack of pricing power. Rapid changes in competitors’
offerings and technological landscape lead to new product requirements by customers over a
short period of time. Companies like
 Infosys: are in Aerospace & Defence, Agriculture, automotive, communication
services, financial services, healthcare, insurance, life science, oil & gas, retail and
many more.
 NIIT Technologies: Travel & Transportation, Insurance, Banking & Financial Services
and enterprise services.
 Mphasis: Banking - Capital market, Insurance, communication, healthcare, energy &
utilities, logistic, manufacturing and other.
 Mindtree: Banking, Capital market, consumer packaged goods, consumer technology,
education, manufacturing, travel & hospitality and other.
 Wipro: Aerospace & Defence, automotive, healthcare, natural resources, securities &
capital market, oil& gas, pharmaceutical & life sciences and other.
Majorly all the peers of persistent has reached in most of the industries so chances to gain market
share is less.
 Subsidiary: Facing losses due to which the profit of the company is reduced.
Subsidiary (in cr.) 2016 2017 2018
Valista Ltd. 0.26 -42.11
Valista Inc 0.02 0.08 -0.78
Persistent Telecom Solutions Inc -10.32 -15.61 -7.90
Persistent Systems Pte Ltd. 7.95 7.30 1.52
Persistent Systems Mexico SA de CV 0.61 0.06
Persistent Systems Malaysia Sdn Bhd -0.20 6.25 7.16
Persistent Systems Lanka (Pvt) Ltd. (Formerly
Known as Aepona Software (Pvt) Ltd.)
2.51
Persistent Systems Israel Ltd. 3.24 4.10
Persistent Systems Inc 18.72 23.87 -25.16
Persistent Systems Germany GmbH -0.07 -3.73
Persistent Systems France SAS 3.08 1.16 5.29
CloudSquads Inc -0.55
PARX Werk AG -3.14
PARX Consulting GmbH 0.01

12/31/2018 6
Operating Profit Margin:
Standalone
Particular Mar. 2014 Mar. 2015 Mar. 2016 Mar. 2017 Mar. 2018
EBIT Margin(%) 28.89 28.10 23.94 23.30 26.27
Consolidated
Particular Mar. 2014 Mar. 2015 Mar. 2016 Mar. 2017 Mar. 2018
EBIT Margin(%) 20.53 20.64 15.99 13.92 14.15
As the subsidiary are facing losses due to which consolidated profit is decreasing. This year
Persistent Systems Inc and Aepona ltd also booked losses above 20 crore.
EBIT margin of consolidated is also continuously decreasing from last five years and is
comparatively low as compared to Standalone.
 No new products are being launced in Accelerite due to which revenue from this segment also
decreased.
Akshat Corporation 3.36 2.80 0.86
Aepona Software (Pvt) Ltd. 1.08 2.28
Aepona Ltd. 7.68 -17.82 -22.46
Aepona Holdings Ltd.
Aepona Group Ltd.

12/31/2018 7
Industry Overview
Software Industry
In the last decade, the industry has grown five fold in revenue terms, and relative share to India’s
GDP has increased to > 7.9 percent in FY2017-18. India is the topmost off-shoring destination for
IT companies across the world. Having proven its capabilities in delivering both on-shore and
off-shore services to global clients, emerging technologies now offer an entire new gamut of
opportunities for top IT firms in India. The country's cost competitiveness in providing IT services,
which is approximately 3-4 times cheaper than the US, continues to be its Unique Selling
Proposition (USP) in the global sourcing market. Indian IT-ITeS industry offers cost-effectiveness,
great quality, high reliability, speedy deliveries and, above all, the use of state-of-the-art
technologies globally.
Indian global sourcing market growth continues to outperform IT-BPM industry growth. During
2017-18, the global IT-ITeS market grew to US$ 1.3 lakh crore (excl. hardware) and global sourcing
market increased by 1.4 times to reach US$ 18500-19000 crore. India continued as the world’s top
sourcing destination with a significant share of 55%. Indian IT-ITeS industry has set up over 1000
global delivery centres in over 200 cities in about 80 countries around the world.
The USA, UK and EU remain the major markets for the IT software and services exports,
accounting for ~90% of the total IT-ITeS exports, however, there are new challenges surfacing in
these traditional geographies. Demands from Asia Pacific (APAC), Latin America and Middle East
Asia is growing and new opportunities are emerging for expanding in continental Europe, Japan,
China and Africa. The estimated share of export markets in FY2017-18:
Source :Ministry of electronic and IT, Website

12/31/2018 8
Business Of The Company
Business Segmentation
Company has organised itself into four business units:
1. Services
2. Digital
3. Alliance
4. Accelerite (Products)
Services Business : Over the last 25 years, the Company has worked closely with customers to
deliver products across all aspects of the product lifecycle. Company provides customers product
engineering services, joint product development with revenue-share models and sell with and
Source : Annual Report, Persistent System

12/31/2018 9
professional services based partnerships. This growth strategy continues with company’s focus on
customers in the business of software, software vendors and businesses enterprises that are
becoming software driven. Persistent had adopted a focussed approach and has chosen 4
industries it wants to service: life sciences, telecom, healthcare, media and financial services.
Product Life Cycle
Digital Business: Persistent has identified enterprise digital transformation (EDT) as the next
growth engine. Persistent has decided to play to its strengths and has come up with a unique
strategy to grow. Digital unit is designed to work with partners and deliver solution to the
customers to help them to become software driven business.
A focus on the “how” of digital by bringing together data, APIs, and experiences. This growth
strategy combines a technology partner ecosystem, solutions, and a unique architecture for
enterprise digital transformation or the transformation to become software driven in
business. Sudhir Kulkarni is the President for the Digital business.
Alliance: Persistent has its alliance with IBM focused around IBM’s Watson IoT (internet of
Things) strategy. This is a preferred alliance with IBM which will enable Persistent to take its
solutions and services to industry 4.0 customer with a focus on digital transformation. As per
the deal, Persistent will bring 500 people (based in US, Europe, Mexico and Israel) on board
which will be a mix of experts from IBM and new talent from the market. In total around 1500
plus people will be working on IBM platforms.
Clients Q2FY19 Q1FY19 Q4FY18 Q3FY18 Q2FY18
Services 433 438 426 431 419
Source : Investowhiz, Website
Product
Development
Life Cycle
Requirement
Gathering &
Scoping
Research &
Usability
Engineering
Prototyping
Development
TestingDeployment
Maintenance &
Technical Support
Training & Sales
Support

12/31/2018 10
This unit is focused on business that it gets directly and indirectly from IBM and affiliates. IBM
is Company’s largest customer.
Persistent earn around 30% of its revenue from IBM alliance.
Accelerite: The Accelerite division is the IP business that focusses on products. The company
has positioned “Accelerite” as a product brand with a variety of products in its portfolio to
meet various customer needs. This strategy is to have a blend of high growth high risk
products as well as low growth low risk ones.
A lot of software vendors have products in their portfolio that aren’t of strategic interest to
them. Persistent approaches these vendors and offers to acquire these product lines along
with its customer base, which is often a win-win scenario for the seller as well as Persistent.
The non-strategic products often receive low R&D investment from the seller, and this
disappoints their customers. The selling company benefits not only in getting a non-strategic
product off their books and transferring the ownership to Persistent, but also by the fact that
Persistent is willing to invest in the product and renew its road map, which makes the
customers happy.
Persistent ensures two essential things before it acquires a product asset. First, they
characterize each product acquired as either of a strategic/high-growth nature, or a
low-growth/low-risk opportunity. "
Products:
 Shareinsights: ShareInsights makes it easy for anyone to explore, transform and visualize
big complex data on AWS or Hadoop data lakes in minutes.
 Neuro: Orchestrate multiple risk engines and authenticators to continuously
authenticate your users with the least amount of friction and higher levels of accuracy.
 Sentient: Sentient is a real-time systems management and security solution that allows
enterprises to query just about anything across endpoints, clouds, and all IT assets, and
be alerted to changes, offering the most complete visibility, detection and response for
informed decision making.
 Rovious Cloud: Rovius is fully managed hybrid cloud infrastructure designed for
enterprise.Rovius Uniquely Provides:
 Platform to run wide range of applications from legacy to bigdata/analytics to IOT
to micro services and more.
 Shortest time to value
 Low total cost of ownership
 Utility based pricing

12/31/2018 11
 Concert Iot: Build an IoT service oriented application ecosystem, optimized for your
market and enriched by your data. Concert IoT framework allow to create IoT
service-oriented apps with IoT PaaS capabilities, allowing partners and developers to
quickly innovate and enrich your ecosystem.
Industry Classification
 Independent software vendors: An ISV (independent software vendor) makes and sells
software products that run on one or more computer hardware or operating system (OS)
platforms. ISVs typically provide software in conjunction with a hardware, software or
cloud platform provider.

12/31/2018 12
 IP Led:
Persistent System is basically focusing on three industries:
1. Financial Services: Technology is making transformation in the financial institutions.
Financial technology companies are automating processes, providing new customer
experiences, and creating new data-driven business models. Persistent Systems is helping
there customers in Banking, Financial Services, and Insurance so that they can become
software driven in their business and in their approach to continuous regulatory
compliance.
2. Healthcare & Life Science: Technology is enabling rapid advancement in biology.
Advancement in biology, improved understanding of the importance of lifestyle, coupled
with the economic incentive driven by the inefficiencies of the current healthcare system,
are at the core of software driven transformation in healthcare.
3. Industrial Iot: Factories and industries are accepting digital technology. Data and signals
collected from a wide range of sensors and interconnected things are enabling companies
to monitor, measure, and optimize their business and operations like never before.
Geographic Distribution

12/31/2018 13
Top Shareholders
Name of Share holders No of shares Percentage
Shridhar Bhalchandra Shukla 1365627 1.71
Saif Advisors Mauritius Ltd. - A/C Saif India IV
FII Holdings Ltd.
3697910 4.62
PSPL ESOP Management Trust 2696141 3.37
Morgan Stanley Investment Funds Indian
Equity Fund
1148759 1.44
Morgan Stanley Indian Investment Funds 1064977 1.33
ICICI Prudential Value Discovery Fund 1295374 1.62
ICICI Prudential Life Insurance Company Ltd. 1321430 1.65
HDFC Trustee Company Ltd. - A/C HDFC MID -
Cap opportunities Fund
1480000 1.85
Government Pension Fund Global 2324258 2.91
Ashutosh Vinayak Joshi 1117946 1.40
Management
Name Designation About
Dr. Anand Deshpande
Founder, Chairman and
Managing Director
 Anand holds a B. Tech. (Hons.)
in Computer Science and
Engineering from the Indian
Institute of Technology (IIT).
 Anand began his professional
career at Hewlett-Packard
Laboratories in Palo Alto,
California, where he worked as
Member of Technical Staff from
May 1989 to October 1990.
 Anand has served numerous
positions at various professional
and non-profit organizations.
Sudhir Kulkarni
President – Sales,
Technology Services
 He holds an MBA from IIM,
Calcutta and a Bachelor’s
Degree from Bombay
University.
 Sudhir has been associated with
AF Ferguson, Coats Viyella and
NIIT, founded two successful

12/31/2018 14
technology companies and ran
two startups in the Silicon
Valley as COO and Managing
Partner.
 Over a rich professional career
of over 30 years in technology
and other businesses.
Col. Jitendra Gokhale President – IBM Alliance
 Jitendra have more than 30
years of experience in the
industry, he also served as a
colonel in the Indian Army
where he managed the
telecommunications network.
 Jitendra holds a Bachelor’s
Degree in Physics from the
University of Pune and a
Bachelor’s Degree in Electronics
and Telecommunications from
JNU, New Delhi.
Mr. Atul Khadilkar
President – Delivery
Operations, Technology
Services
 Atul is a technologist and has
around 30 years of experience
in Business & Engineering
Leadership roles.
 He holds a Bachelor’s Degree in
Computer Engineering from
University of Pune, India.
 His domain experience covers
Infrastructure & Systems,
Financial Services, Life Sciences
& Healthcare and Logistics.
Mr. Tom Klein
General Counsel and
Senior Vice President of
Corporate Development
 Tom is a graduate of
Swarthmore College and the
University of Chicago School of
Law.
 More than 25 years of
experience in technology law
including an extensive focus on
start-up and venture capital
transactions, mergers and
acquisitions as well as domestic
and international intellectual
property transactions.
Dr. Siddhartha Chatterjee
Chief Technology Officer
 Prior to Persistent, Sid was with
IBM for 13 years during which,
he has held multiple technical,
strategic, managerial, and
executive positions.

12/31/2018 15
 He holds a B. Tech. (Honors)
degree in Electronics and
Electrical Communications
Engineering from IIT,
Kharagpur.
Mr. Sunil Sapre
Executive Director and
Chief Financial Officer
 Sunil has had over 25 years of
experience in the areas of
corporate finance, international
and domestic taxation and
management accounting.
 He holds a Bachelor’s degree in
Commerce and is a member of
the Institute of Chartered
Accountants of India.
Mr. Sameer Bendre
Chief People Officer
 Sameer holds a Bachelor’s
degree in Electronics
Engineering from Nagpur
University.
 Prior to Persistent, Sameer was
CEO of his own company,
Nagpur Motors Pvt. Ltd.
manufacturing electric motors.

12/31/2018 16
Financial Information
Balance Sheet
Particulars 2014-15 2015-16 2016-17 2017-18
Assets
Non-current assets
Property, plant and equipment 302.07 296.82 276.84 258.13
Capital work in progress 4.00 2.36 4.85 0.77
Goodwill 2.39 7.79 7.62 7.66
Other intangible assets 99.53 156.68 275.62 250.83
Financial assets 237.91 242.56 339.33 306.12
Other Assets 32.51 77.81 37.82 73.35
Current Assets
Financial Assets 1068.05 1240.20 1309.31 1594.26
Other Assets 41.66 95.64 94.98 167.74
Total Assets 1788.12 2119.86 2346.37 2658.86
Equity & Liabilities
Equity 1470.10 1657.78 1899.26 2127.20
Non current liabilities
Financial Liabilities 2.62 2.70 4.14 1.66
Provisions 11.60 12.44 14.61 15.97
Other Liabilities 0.25 11.07 27.04
Current Liabilities
Financial Liabilities 103.20 213.83 166.29 206.94
Provisions 127.38 122.36 139.11 159.95
Other Liabilities 72.97 110.75 111.88 120.10
Total Equity & Liabilities 1788.12 2119.86 2346.37 2658.86

12/31/2018 17
Profit and Loss
Particulars 2014-15 2015-16 2016-17 2017-18
Net Sales 1891.25 2312.33 2878.44 3033.70
Expenditure
Power & Fuel Cost 11.13 14.98 13.87 10.45
Employee Cost 1220.33 1565.42 1982.66 2149.71
Cost of Software Developments 49.72 72.33 81.46 93.34
Operating Expenses 44.71 42.32 38.39 34.07
General and Administration Expenses 138.42 181.33 229.09 224.41
Selling and Marketing Expenses 7.55 12.72 21.47 16.44
Miscellaneous Expenses 34.62 52.75 46.15 53.60
Total Expenditure 1506.48 1941.85 2413.09 2582.01
PBIDT (Excl OI) 384.77 370.48 465.35 451.70
Other Income 99.39 98.31 95.85 136.13
Operating Profit 484.16 468.80 561.19 587.83
Interest 0.34 0.09 0.09 0.08
Exceptional Items -11.41
Depreciation 93.85 99.01 149.02 158.49
Profit before tax 389.97 369.69 400.67 429.26
Provision for Tax 99.34 92.39 99.21 106.17
Profit after tax 290.63 277.3 301.47 323.09
Cash Flow Statement
Report Date (in Cr.) 2014-15 2015-16 2016-17 2017-18
Cash from Operating Activity 311.60 254.06 286.41 421.19
Cash from Investing Activity -231.55 -116.18 -221.94 -347.39
Cash from Financing Activity -65.66 -126.63 -58.41 -95.61
Net Cash Flow 14.39 11.26 6.07 -21.81

12/31/2018 18
Ratio
Performance
Ratios
2014 2015 2016 2017 2018
ROA 20.27 17.97 14.95 15.28 15.78
ROE 22.58 20.35 17.22 17.58 17.82
ROCE 30.92 27.23 23.67 23.86 23.51
Financial
Stability
2014 2015 2016 2017 2018
Current Ratio (x) 5.94 4.70 5.39 5.27 6.55
Valuation Ratios 2014 2015 2016 2017 2018
EPS (x) 62.32 36.33 34.66 37.68 40.39
P/E (x) 8.41 19.60 21.97 15.81 17.10
P/BV (x) 3.44 4.07 3.71 2.53 2.61
EV/EBITDA (x) 9.20 11.48 12.70 8.23 8.99
Efficiency Ratios 2014 2015 2016 2017 2018
Fixed
Capital/Sales(x)
0.46 0.47 0.44 0.41 0.43
Receivable days 59.91 63.82 62.04 57.25 57.76
Payable days 11.86 12.72 22.34 23.20 22.17
Du Pont Analysis 2014 2015 2016 2017 2018
PATM (%) 14.93 15.37 11.99 10.47 10.65
Sales / Total
Assets(x)
1.21 1.16 1.20 1.30 1.24
Assets to Equity
(x)
1.24 1.24 1.27 1.26 1.23
ROE (%) 22.31 22.19 18.23 17.11 16.16

12/31/2018 19
Analysis
Peer Analysis
Particular Persistent System Cyient NIIT Tech
Sales 1732.75 3913.90 1645.90
PAT 342.12 418.70 226.20
PATM% 10.65 10.69 13.74
ROCE% 21.30 22.72 19.78
ROE% 16.16 18.44 16.26
ROA 13.16 10.61 10.51
EPS 45.33 36.00 45.56
Dividend Yield% 1.60 2.09 1.30
P/E 17.10 19.13 18.97
Mcap.(cr.) 4997.20 7019.51 6978.67
Sales Growth(%) 5.39 9.15 6.76
Price to Free Cash
Flow
13.10 36.83 15.89
Free Cash Flow per
Share
52.72 18.70 54.39
EV/Net Sales(x) 1.74 1.80 1.64

12/31/2018 20
Valuations
Scenario 1 assumption:
Based on Profit after tax margin
 In Part - A it is assumed that sales will grow with a CAGR of 14% till FY21 which resulted into
the Rs.4762.11 cr.
 In Part - B it is assumed that sales will grow with a CAGR of 12% till FY21 which resulted into
the Rs.4467.90 cr.
 In column A, we have assumed 5 years average EBITDAM (%) which is 18.33% and in column B,
we have assumed 3 years average EBITDAM (%) which is 15.67%.
FY 21 (E)
Particular 5 years avg. EBITDAM(%) - A 3 years avg. EBITDAM(%) - B
SALES (in Cr.) 4762.11 4467.90
EBITDAM(%) 18.00 16.00
EBITDA (in Cr.) 872.90 700.12
EV/EBITDA (x) 7.48 7.48
EV (in Cr.) 6529.26 5236.90
Cash-Debt (in Cr.) 152.01 152.01
MCap (in Cr.) 6377.25 5084.98
No. of shares (in Cr.) 8.00 8.00
Price (Rs.) 797.15 635.61
Scenario 2 assumption: -
 In Part - A it is assumed that sales will grow with a CAGR of 14% till FY21 which resulted into
the Rs.4762.11 cr.
 In Part - B it is assumed that sales will grow with a CAGR of 12% till FY21 which resulted into
the Rs.4467.90 cr.
 We have assumed EBITDAM (%) as 18% because as per Morgan Stanley, the change in
business model will help the Company improve its margins by approximately 200 basis points
over the next three years.

12/31/2018 21
FY 21 (E)
Particular 5 years avg. EBITDAM(%) - A 3 years avg. EBITDAM(%) - B
SALES (in Cr.) 4762.11 4467.90
EBITDAM(%) 18.00 18.00
EBITDA (in Cr.) 857.18 804.22
EV/EBITDA (x) 7.48 7.48
EV (in Cr.) 6411.71 6015.59
Cash-Debt (in Cr.) 152.01 152.01
MCap (in Cr.) 6259.70 5863.58
No. of shares (in Cr.) 8.00 8.00
Price (Rs.) 782.46 732.94

12/31/2018 22
Conclusion
Recommendation
Persistent Systems is a global company specialised in software product and technology services.
Persistent has customers spread across North America, Europe, and Asia. North America
contributes approx. 82% of its revenue mix. Persistent system is now focusing more on acquiring
entities to expand its geographical reach and because of which its inorganic growth is increasing.
Persistent system digital segment contributes 22% of overall revenue. Company is seeking good
pipeline projects in digital and is expecting digital business to rebound to growth from HY2FY19
onwards.
Persistent system has shifted its business model from offshore software product development
services to partnership-led platform-based and intellectual property offerings, which sets the
Company apart from other Indian technology companies. As per Morgan Stanley, the change in
business model will help the Company improve its margins by approximately 200 basis points over
the next three years.
Revenue from the top 10 clients is more than 50%, so the loss of a big client can cause a
disturbance in its earning. The company is facing stiff competition from other large and small
software companies in India and they have a lack of pricing power. Persistent earn around 30%
of its revenue from IBM alliance so any problem in this alliance can cause a huge loss in its
revenue.
As the subsidiaries are facing losses due to which consolidated profit is decreasing. EBIT margin of
consolidated is also continuously decreasing from last five years and is comparatively low as
compared to Standalone. Decline in revenue from digital business due to the closure of one
project.
We are “neutral” on this stock and are expecting that in the next 3 years stock can reach the price
between 732.94 to 797.15.

12/31/2018 23
Sources
 Annual Report
 Persistent System website
 Conference Call
 BSE website
 IBEF
 Web based Software – Ace Analyser
 Ministry of Electronics & Information Technology
 Investowhiz Analysis
Research Analyst Details:
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

Jainam Share Consultant Pvt Ltd Sector : IT Consulting & Software
31-12-2018 24
Full Form & Glossary
Abbreviation Full Form
BV Book Value
CAGR Compound Annual Growth Rate
CAPEX Capital Expenditure
COGS Cost of Goods Sold
DPS Dividend Per Share
EBIT Earnings before interest and taxes
EBITDA Earnings before interest, tax, depreciation and amortization
EPS Earning Per Share
EV Enterprise Value
FY Financial Year
GP Gross Profit
HY Half Year
MCap Market capitalization
NAV Net Asset Value
NII Net Interest Income
NOI Net Operating Income
NOPAT Net Operating Profit after Tax
NPV Net Present Value
OCF Operating Cash Flow
OI Operating Income
P&L Profit & Loss
P/E Price/Earnings Ratio
PAT Profit After Tax
PATM Profit After Tax Margin
PBT Profit Before Tax
QOQ Quarter on Quarter
RE Retained Earning
ROA Return on Assets
ROCE Return on Capital Employed
ROE Return on Equity
ROI Return on Investment
ROIC Return on Invested Capital
RONA Return on Net Asset
TTM Trailing Twelve Month
WC Weighted Average Cost of Capital
YOY Year over Year

31-12-2018 25
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31-12-2018 26
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
Analyst Certification: The Analyst certify (ies) that the views expressed herein accurately reflect his (their)
personal view(s) about the subject security (ies) and issuer(s) and that no part of his (their) compensation was, is or
will be directly or indirectly related to the specific recommendation(s) or views contained in this research report.
Disclaimer: www.jainam.in is the domain owned by Jainam Share Consultants Pvt. Ltd.
SEBI (Research Analyst) Regulations 2014, Registration No. INH000006448
The views expressed are based solely on information available publicly and believed to be true. Investors are advised
to independently evaluate the market conditions/risks involved before making any investment decision.
This report is for the personal information of the authorized recipient and does not construe to be any investment,
legal or taxation advice to you. This report should not be reproduced to any other person in any form. This document
is provided for assistance only and is not intended to be and must not alone be taken as the basis for an investment
decision. Jainam Share Consultants Pvt. Ltd. or any of its affiliates or employees shall not be in any way responsible for
any loss or damage that may arise to any person from any inadvertent error in the information contained in this
report. Neither Jainam Share Consultants Pvt. Ltd., nor its employees, agents nor representatives shall be liable for
any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that
may arise from or in connection with the use of the information. Jainam Share Consultants Pvt. Ltd. or any of its
affiliates or employees do not provide, at any time, any express or implied warranty of any kind, regarding any matter
pertaining to this report, including without limitation the implied warranties of merchantability, fitness for a particular
purpose, and non-infringement.
The recipients of this report should rely on their own investigations. Jainam Share Consultants Pvt. Ltd. and/or its
affiliates and/or employees may have interests/ positions, financial or otherwise in the securities mentioned in this
report. Jainam Share Consultants Pvt. Ltd. has incorporated adequate disclosures in this document. This should,
however, not be treated as endorsement of the views expressed in the report. We submit that no material disciplinary
action has been taken on Jainam Share Consultants Pvt. Ltd. by any regulatory authority impacting Equity Research
Analysis.

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