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information technology | IST

Persistent Systems to maintain margin at 16-17%; confident of continuing growth trajectory

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Persistent Systems' Q2 results were very strong, as dollar revenue beat Street estimates while EBIT margin expanded for the seventh straight quarter. Sandeep Kalra, Executive Director and President at Persistent Systems, spoke to CNBC-TV18 about the company's performance .

Tech firm Persistent Systems, on Tuesday, reported a 58.6 percent rise in consolidated net profit to Rs 161.7 crore for the September 2021 quarter. The company had registered a profit of Rs 101.9 crore in the year-ago period, it said in a statement.
Revenue from operations increased 34.1 percent to Rs 1,351.2 crore during the quarter under review as against Rs 1,007.7 crore a year ago.
In dollar terms, the company's revenue grew 34 percent to USD 182.32 million during the quarter, from USD 136.09 million in the same period last fiscal.
Sandeep Kalra, Executive Director and President at Persistent Systems, spoke to CNBC-TV18 about the company’s performance and outlook.
On growth, Kalra said, “The demand environment is good. So the pipeline being good, execution is fairly good. So we are confident of continuing that trajectory. We don't give forward-looking numbers. So I won't say whether we will do 30 percent this year, but overall, the direction is good.”
On margins, he said, “We came in at about 16.6 percent on the EBITDA side compared to 16.4 percent last quarter. EBIT came in at about 13.9 percent versus 13.4 percent.”
“There was a salary impact, about 2.3 percent negative impact, because obviously, the salary increases take it down. But there are other levers like our pricing side of it, utilization went up by about 2.7 percent on a quarterly basis. So, if you look at it, all these leverages have got us to a level where the margin is stable. We have always said we want to be in the 16 to 17 percent band.”
“We are delivering industry leading growth and our first priority is to continue with industry-leading growth. In the next two to three years, we want to go up by 100 basis points or so on the EBITDA side,” he added.
On acquisitions and its impact on revenue, Kalra said, “So the two acquisitions that we made were SCI, which is roughly at a clip of about $17.50 million for the year. The second acquisition is Shree Partners, which is roughly about $7 million plus for the year. So let us say roughly, between the two companies, the revenue is close to $25 million.”
With regard to Europe business, he said, “Europe for us has been a very small market. If you look at European footprint for us, it is roughly about 8.8 percent. That is a stated strategy that we want to grow there inorganically and organically as well. We are in the process of looking at multiple initiatives on both sides and hopefully, as we go along, that is an area of improvement for us, where we will definitely put more focus.”
On deal pipeline, Kalra said, “The deal pipeline remains healthy and we are seeing participation in even larger deals. So, one of the deals that we won in the quarter gone by was another $50 plus million deal. For a company like ours, in the last year, we won multiple 50 million plus kind of deals. So overall good pipeline, good traction, and hopefully this continues for longer.”
-With PTI inputs
For full management commentary, watch the video.