Maintain BUY on Persistent Systems - Structural pivot to high growth - HDFC Securities
Posted On: 2021-02-03 09:56:51 (Time Zone: Arizona, USA)
Mr. Apurva Prasad, Institutional Research Analyst, HDFC Securities & Mr. Amit Chandra, Institutional Research Analyst, HDFC Securities
We maintain BUY on Persistent Systems (PSYS) and assign it in our top picks, due to a solid 3Q (in-line), strong growth visibility supported by robust TCV bookings (including high ACV component), and a structural pivot towards high growth. The strong technology-led differentiation overlaid by improved client mining/bigger deals and focus on partnerships/sourcing will drive PSYS into industry-leading quadrant. With growth markers established around Technology services, acceleration in Alliance can be an added trigger as PSYS realigns with top customer around Red Hat, hybrid cloud (Cloud Paks) opportunities. Operational performance continues to improve with margin improvement despite two-month impact o
Maintain BUY on Mphasis - Growth vectors intact - HDFC Securities
Posted On: 2021-01-27 09:05:25 (Time Zone: Arizona, USA)
Mr. Apurva Prasad, Institutional Research Analyst, HDFC Securities & Mr. Amit Chandra, Institutional Research Analyst, HDFC Securities
We maintain BUY on Mphasis (MPHL), based on strong growth outlook in Direct International (85% of revenue) and despite the uncertainty around the diminishing DXC portfolio (13% of revenue). Key indicators for Direct International growth are (1) deal pipeline increase by 49% and 9MFY21 net new TCV growth of 68% YoY, (2) increase in large & integrated deal component and broad-based growth (T10 and >USD5mn accounts), (3) acceleration in sub-segments such as Europe geography and Direct-Hi-tech sub-vertical, and (4) recent wins expected to improve the growth prospects of Insurance vertical. Operating performance of MPHL remains consistent within its 15.5-16.5% EBIT band and presents an upward bias with levers such as offshore
Maintain ADD on Zensar Technologies - Margin reset, growth to catch up - HDFC Securities
Posted On: 2021-01-27 09:05:36 (Time Zone: Arizona, USA)
Mr. Apurva Prasad, Institutional Research Analyst, HDFC Securities & Mr. Amit Chandra, Institutional Research Analyst, HDFC Securities
We maintain our ADD rating; Zensar reported excellent margin performance (decade-high) but the growth engine is still under pressure (-3.7% QoQ CC). The fall in revenue was due to stress in the Hi-Tech vertical (-10.2% QoQ); ex Hi-Tech, revenue was up 3.5% QoQ. Project closures and lower spending by top clients led to the decline. However, Zensar has not lost wallet share in the account, and revival will take another 1-2 quarters. Under the new CEO, the company will focus on reviving growth, maintaining a margin profile in a narrow band, and close large deals. TCV wins stood at USD 200mn (+14.3% QoQ) and the deal pipeline improved to USD 1.7bn (highest ever). Margin expansion of ~560bps in 9MFY21 w