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Persistent Systems: Good Operating Performance - Views on News from Equitymaster
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Persistent Systems: Good Operating Performance
Apr 28, 2017

Persistent Systems has announced its fourth quarter and full year FY17 results. Sales declined by 2.5% QoQ and net profits decreased by 1.9% QoQ in 4QFY17. Here is our analysis of the results.

Performance summary
  • Consolidated sales decreased 2.5% QoQ in rupee terms. In US$ terms, the topline was down by 0.9% QoQ. The appreciation of the rupee against the dollar impacted the topline.
  • The operating profit was up by 9.7% QoQ; while the operating margin increased to 17.9% in 4QFY17 compared to 15.9% in 3QFY17.
  • Profit before tax was down 16.2% QoQ. The bottomline was impacted by a one-off exceptional item arising out of an out of court legal settlement. The net profit and net margin was flat sequentially.
  • The management has declared a final dividend was Rs 3 per share. The company had paid an interim dividend of Rs 6 per share. The dividend payout ratio for FY17 was 28.7% versus 21.5% in FY16.

    Consolidated Financial Performance
    Rs m 3QFY17 4QFY17 Change FY16 FY17 Change
    Sales 7,455 7,271 -2.5% 23,123 28,784 24.5%
    Expenditure 6,269 5,969 -4.8% 19,208 24,131 25.6%
    Operating Profit (EBITDA) 1,187 1,302 9.7% 3,915 4,653 18.9%
    Operating Profit Margin (%) 15.9% 17.9% 16.9% 16.2%
    Depreciation 387 394 2.0% 990 1,490 50.5%
    EBIT 800 907 13.4% 2,925 3,163 8.1%
    Other Income/(Loss) 318 143 -55.0% 772 958 24.0%
    Exceptional Item 0 -114 0 -114
    Profit Before Tax (PBT) 1,118 936 -16.2% 3,697 4,007 8.4%
    Tax 299 209 -30.2% 924 992 7.4%
    Profit after Tax (PAT) 819 728 -11.1% 2,773 3,015 8.7%
    Other comprehensive income -46 30 248 -33
    Net Profit 773 758 -1.9% 3,021 2,982 -1.3%
    Net Profit Margin 10.4% 10.4% 13.1% 10.4%
    No. of shares (m) 80.0
    Diluted earnings per share (Rs) 37.7
    P/E ratio (x)* 15.6

    Revenue Break-up
    Rs m 3QFY17 4QFY17 Change
    By Industry
    Services 3,273 3,192 -2.5%
    Digital 1,260 1,374 9.1%
    Alliance 2,281 2,007 -12.0%
    accelerite 641 698 8.9%
    By Geography
    North America 6,456 6,289 -2.6%
    Europe 395 385 -2.5%
    India 410 407 -0.7%
    Rest of the World (RoW) 194 189 -2.5%
    By Service Line
    ISV 3,169 3,047 -3.8%
    Enterprise 2,170 2,218 2.2%
    IP Led 2,117 2,007 -5.2%
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