Home / Companies / Persistent Systems lowers growth forecast for Q4

Mumbai: Pune-based software services exporter Persistent Systems Ltd on Monday informed the BSE that it expects to report muted dollar revenue growth for the three months ended 31 March, chiefly on account of “a change in business priorities of one of our large customers in the product engineering space."

Increased investments in research and development and sales and marketing would also lead to margin pressure in the March quarter, the company added.

Persistent Systems’ business update follows similar updates for the March quarter by Tata Consultancy Services Ltd, India’s largest software services exporter, Wipro Ltd, India’s third largest software services exporter and Mindtree Ltd, a mid-tier software services exporter.

On 6 March, Rajesh Gopinath, chief financial officer of TCS told industry analysts that the company was likely to report muted earnings for the three months ended March 31 on account of sluggish spending by clients in January and February especially in the telecom, insurance and energy verticals, combined with continued currency volatility.

On 9 March, Mindtree Ltd said in a statement to the BSE that it expects a marginal fall in dollar revenue growth in the March quarter due to sustained depreciation of certain currencies against the dollar and the delay in the starting of projects at two of its clients in retail and consumer packaged goods vertical.

On 12 March, Wipro Ltd told analysts that its March quarter earnings may be impacted by troubles in its top accounts, especially in the oil and gas vertical, as well as some client-specific issues in Europe.

Besides, Infosys Ltd, India’s second largest software services exporter is expected to delay the reporting of its March quarter earnings by ten days for the first time, in order to give its chief executive officer, Vishal Sikka more time to carve out a strategy roadmap for the company. Infosys March quarter earnings will now be announced on 24 April, as per a Mint report on 5 March.

“While the lowered growth forecast for the March quarter by Persistent Systems and Mindtree may be related to client-specific issues, for TCS and Wipro it is more an impact of cross-currency headwinds, as well as lower revenue from the energy vertical that is expected to continue into the next quarter as well," said Ravi Menon, vice president of IT services and Internet equity research at Mumbai-based brokerage, Elara Capital (India) Pvt Ltd.

Persistent Systems, however, said that it continues to see a favourable demand environment and with strong traction in its enterprise segment, specifically for the platforms and enterprise digital transformation space, it is optimistic about its market positioning, opportunities and growth plans for financial year 2016.

In the three months ended 31 December, Persistent Systems reported a 16% rise in net profit at 74.4 crore as compared to the year ago period, while its revenue rose 14.3% to 494.6 crore. Its dollar revenue grew 13.7% to $79.52 million as compared to a year earlier.

On Monday, shares of Persistent Systems lost 4.41% to end the day’s trade at 770.40 apiece, while the benchmark Sensex ended trade down 0.23% at 28,43.71 points.

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