BackPersistent Systems Q2 net profit up 17.3% to Rs71.3 crore
Revenue in the September quarter rose 7.4% from the year ago period to Rs464 crore
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Mumbai: Persistent Systems Ltd, a mid-sized software services exporter, said on Saturday that its fiscal second quarter net profit rose 17.3% from a year earlier to ₹ 71.3 crore, boosted mainly by digital transformation projects from the company’s services and intellectual property (IP) business. In the year ago period, Persistent Systems reported a net profit of ₹ 60.8 crore.
Revenue in the September quarter rose 7.4% from the year ago period to ₹ 464 crore. A consensus of 25 analysts estimates compiled by Bloomberg forecast net profit of ₹ 72.228 crore on revenue of ₹ 467.7 crore.
Dollar revenue was up 11.5% year-on-year to $76.32 million in the quarter under review.
On a sequential basis, net profit rose 3.6%, while revenue increased 6.7%. Earnings before interest, taxes, depreciation and amortization (ebitda) margins grew by 20.6%.
“Persistent System’s services business grew by 5.6%, while its IP business grew by 2.8%, sequentially," said Anand Deshpande, chairman and managing director, Persistent Systems.
“Our growth going forward will largely be driven by digital transformation, which is where we have created a leadership position for ourselves using in-house developed methodology for helping companies deliver on their digital strategy. Thus, while in the past we have specialized in IT product development, now we are increasingly winning deals for next-generation technology products from key vendors," Deshpande said.
Deshpande added that the company which has a venture fund to partner with start-ups is looking to invest approximately $1.5 million in 6-8 start-up partnerships per year for the next two-three years. The amount will be increased as the company begins to see return on investment, which it expects within the next three years.
The company will also invest in innovative technology ideas from employees, besides providing funding to start-ups founded by ex-Persistent employees.
In the September quarter, Persistent Systems announced a 4% acquisition in Pune-based start-up specializing in the Internet of Things (IoT), Altizon Systems Pvt. Ltd, and some of the assets of Pune-based mobile advertising firm Hoopz Planet Info Pvt. Ltd.
“Despite wage hike and expenses on skill development for employees, the quarter has been very strong with positive margins," said Sanchit Vir Gogia, chief analyst and chief executive officer at research firm, Greyhound Research. “The Reserve Bank’s decision to allow up to 49% investments in Persistent Systems is an added boost to its quarter results that showcases that all the relevant metrics are in good health in the company. Persistent Systems plans to invest $12 million annually in emerging technologies and IPs to increase its own base of intellectual property," Gogia added.
On Friday, Persistent Systems lost 0.92% to close at ₹ 1,336.55 per share on BSE, while the benchmark Sensex gained 0.42% to close at 26,108.53 points and the BSE IT Index lost 4% to close at 10,130.95 points.
In the last one year, shares of Persistent Systems have gained 90.89%, while the Sensex has gained 27.89% and the BSE IT Index has lost 19.9%.
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