IT stocks have been among the top supporters of the recent stock market rally with many shares from the space giving multibagger returns in 2021. One such stock is Persistent Systems that has rallied 207% in a year and has surged 140% this year (year-to-date) alone. The multibagger stock could rally further as brokerage Emkay sees more upside on the IT stock.
“Persistent Systems (PSYS) has seen a 5.6% CQGR in services revenue since Q1FY20, despite Covid-19 disruptions. It indicates healthy demand for the company’s offerings and early results of leadership augmentation, recalibrated sales incentive structure and strong execution," the brokerage said in a report on Monday.
Among its coverage companies, Emkay expect Persistent to lead the pack in terms of organic revenue growth. A strong earnings trajectory and healthy cash generation should help to sustain higher valuations, the brokerage has retained Buy rating on the stock with a target price of of ₹3,700 per share.
PSYS is seeing broad-based healthy demand and expects demand to remain strong in the next 3-5 years. It is confident of sustaining the revenue growth momentum on the back of broad-based demand, robust deal intake, healthy deal pipeline and new logo additions, the note stated.
PSYS continues to focus on mining its strategic clients by cross-selling and upselling. "It has been successful in scaling up its USD1-5mn and USD5mn+ clients to 76 and 21 now, respectively, from 61 and 11 clients at FY20-end. The company is considering M&A to add capabilities across service lines (Cloud, data and security), verticals (BFSI and Healthcare) and geography (Europe)," Emkay added.
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
