Home / Markets / Stock Markets /  Why this IT stock is Axis Securities' top pick of the week
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Persistent Systems Ltd reported strong and broad-based growth in Q4FY22 and beat analysts' expectations on all key parameters. The growth was led by the company’s strong execution capabilities, higher utilization, and lower travel cost during the quarter, highlighted brokerage Axis Securities in a note.

“The majority of the verticals are witnessing strong recovery and backed by a strong deal pipeline, they are expected to continue reporting growth in forthcoming quarters," the note stated.

Recommending as its top pick, the brokerage house has maintained its Buy rating on the IT stock with a target price of 4,760. Persistent Systems shares have rallied about 93% in a year's period, however, the stock is down over 15% in 2022 (YTD) so far.

“Persistent Systems' management has taken cost optimization efforts which help them to gain long term sustainable operating margins. There are some tailwinds like better service mix, reducing the marketing spend, lowering travel cost, employee restructuring and improving utilization. We believe gaining the efficiency over business will help them to get more profitability and higher return ratios," Axis Securities added.

Persistent Systems deal pipeline remained industry leading in Q4FY22 at $361 million. The IT company won many large transformation deals despite uncertainty and across verticals like BFSI, communication, manufacturing, automobile. This healthy deal pipeline will help to improve revenue visibility for FY23E and FY24E, as per the brokerage.

Persistent will continue to invest in digital technologies, Digital Talent and S&M which is imperative to drive growth. Axis Securities believes that covid outbreak will create huge opportunity across geographies to post strong organic growth over different verticals.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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