#Future #Plan
The industry is in the third wave of AI evolution. The first was driven by machine learning, the second by deep learning and the third by foundation models that will enable companies to further fine-tune the necessities of specialized domains and tasks. โข Blockchain global market stood at $20 billion in 2024 and is expected to grow to $250 billion by 2029. (Source: MarketsandMarkets) โข The overall emerging markets, especially Generative AI would reach $1.3 trillion by 2032 from $67 bn in 2023. (Source: Bloomberg) โข Digital engineering spends at enterprise level stood at $1,032 bn in 2024 and is expected to reach $1,654 bn by 2027, according to Zinnov. This spend is largely driven by investments focused on building digital infrastructure and development/re-engineering of products and services. Services-led verticals such as BFSI, Retail, Healthcare are increasing their consumption of technology spend to enable new products and services. โข According to a report by GrandView Research, in 2023, the worldwide digital transformation market was assessed to be $880 bn, and it is projected to experience a strong growth from 2024 to 2030, driven by growing adoption of cutting-edge technologies such as cyber security, Artificial Intelligence (AI), big data analytics, Business Intelligence (BI), and cloud.
The industry is in the third wave of AI evolution. The first was driven by machine learning, the second by deep learning and the third by foundation models that will enable companies to further fine-tune the necessities of specialized domains and tasks. โข Blockchain global market stood at $20 billion in 2024 and is expected to grow to $250 billion by 2029. (Source: MarketsandMarkets) โข The overall emerging markets, especially Generative AI would reach $1.3 trillion by 2032 from $67 bn in 2023. (Source: Bloomberg) โข Digital engineering spends at enterprise level stood at $1,032 bn in 2024 and is expected to reach $1,654 bn by 2027, according to Zinnov. This spend is largely driven by investments focused on building digital infrastructure and development/re-engineering of products and services. Services-led verticals such as BFSI, Retail, Healthcare are increasing their consumption of technology spend to enable new products and services. โข According to a report by GrandView Research, in 2023, the worldwide digital transformation market was assessed to be $880 bn, and it is projected to experience a strong growth from 2024 to 2030, driven by growing adoption of cutting-edge technologies such as cyber security, Artificial Intelligence (AI), big data analytics, Business Intelligence (BI), and cloud.
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#COMPANY #OUTLOOK
โข The company remains confident on achieving healthy growth on account of a strong deal pipeline that is well diversified across regions and verticals coupled with an improved spending environment. โข The company anticipates demand to uptick in the coming quarters with clients willing to upgrade, innovate and continue with their tech spend. Furthermore, growth in smaller deals gives confidence of increasing discretionary spending. โข For FY25, the companyโs revenue growth guidance was revised at 4.5%-5% YoY in cc terms, upgrading from 3.5%-5%, including the revenue from the acquisition of assets from HP Enterprises that completed in December. Further, their guidance for EBIT margins continues to be in the range of 18%-19%. Services revenue is now expected to grow in the range of 4.5%-5% YoY in cc terms for FY25. The previous guidance was 3.5%-5%. Excluding the inorganic contribution, the mid-point of the revenue guidance for FY25 stays the same at 4.25% in cc terms. โข They anticipate revenue growth run rate of Service segment during Q4 FY25 to be in the range of negative 1.3%-1% in cc terms. In Q4 FY25, the company has accounted for some planned contractual reductions in the telecom mega deal, absence of the successful delivery of projects that happened in Q3 FY25, and certain delays in deal conversion. โข Certain integration costs are anticipated to continue in the next quarter as well with a similar impact on margins of 20 bps. Their aspirational EBIT margin would be in the range of ~19%-20%, going ahead. โข Fresher hiring is expected to increase in FY26 to cater to the demand. Attrition in FY25 would stay in ranges of 13%-13.5%. โข Retail and Telecom verticals would be soft in the next couple of quarters due to the completion of the deal execution. โข Manufacturing, excluding auto has been performing well but the challenging environment in auto is expected to continue for a few quarters.
โข The company remains confident on achieving healthy growth on account of a strong deal pipeline that is well diversified across regions and verticals coupled with an improved spending environment. โข The company anticipates demand to uptick in the coming quarters with clients willing to upgrade, innovate and continue with their tech spend. Furthermore, growth in smaller deals gives confidence of increasing discretionary spending. โข For FY25, the companyโs revenue growth guidance was revised at 4.5%-5% YoY in cc terms, upgrading from 3.5%-5%, including the revenue from the acquisition of assets from HP Enterprises that completed in December. Further, their guidance for EBIT margins continues to be in the range of 18%-19%. Services revenue is now expected to grow in the range of 4.5%-5% YoY in cc terms for FY25. The previous guidance was 3.5%-5%. Excluding the inorganic contribution, the mid-point of the revenue guidance for FY25 stays the same at 4.25% in cc terms. โข They anticipate revenue growth run rate of Service segment during Q4 FY25 to be in the range of negative 1.3%-1% in cc terms. In Q4 FY25, the company has accounted for some planned contractual reductions in the telecom mega deal, absence of the successful delivery of projects that happened in Q3 FY25, and certain delays in deal conversion. โข Certain integration costs are anticipated to continue in the next quarter as well with a similar impact on margins of 20 bps. Their aspirational EBIT margin would be in the range of ~19%-20%, going ahead. โข Fresher hiring is expected to increase in FY26 to cater to the demand. Attrition in FY25 would stay in ranges of 13%-13.5%. โข Retail and Telecom verticals would be soft in the next couple of quarters due to the completion of the deal execution. โข Manufacturing, excluding auto has been performing well but the challenging environment in auto is expected to continue for a few quarters.
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HCL Technologies 1300-1430
Expected level 1700
Support 1200
Expected level 1700
Support 1200
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(For Educational Purpose Only) ๐ฐ
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Persistent Systems company details report
Incorporated in 1990, Persistent Systems Limited is amongst the worldโs leading providers of product engineering services, platformbased solutions and IP (intellectual property) based software products for global customers. It derives a significant portion of revenue from export of software services and products. It is engaged in providing product and services such as Product & Platform Engineering, CX (customer experience) & Design-Led Transformation, Data & Artificial Intelligence, Cloud-enabled Enterprise Modernization. On 4th May 2022, the company completed its acquisition of MediaAgility Inc., USA and its subsidiaries in the UK, Mexico, and Singapore. MediaAgility is a global cloud transformation services provider with deep expertise in building scalable, cloud-based solutions as a Google Cloud Premier Partner. The total purchase consideration payable for the acquisition of MediaAgility is $71.7 million. MediaAgility had a consolidated revenue of $25.5 million as on LTM December 2021. On 1st March 2022, they acquired businesses from Data Glove IT Solutions Private Ltd, India, Data Glove Inc., USA and its affiliate entities based out of Australia, UK, Singapore and Costa Rica (together referred to as โData Glove Groupโ) for $90.5 million. Data Glove Group specializes in providing services across the entire Microsoft Product Suite including Azure based digital transformation, data modernization, cloud advisory services, business application innovation, workspace modernization and intelligent automation. They had total annual revenue for CY21 of $48.9 million and over 700 employees worldwide. In Q4 FY24, the company launched โSASVAโ, a manageable and secure AI platform that solves complex and specialized use cases in the enterprise setting. It revolutionizes software engineering, with an AI-powered platform leveraging Large Language Models and Machine Learning. It drives enhanced efficiency and agility for organizations across industries by automating and optimizing software engineering lifecycle. During Q2 FY25, they acquired 100% stake of Arrka, a Pune based company renowned for its decade-long privacy expertise, its pioneering Data Privacy Management platform and growing expertise in AI governance. Arrkaโs data privacy management platform enables organizations to manage their data privacy risks and comply with multi-jurisdictional legal & regulatory requirements in an integrated manner. The consideration stood at ~โน14 crore and FY24 revenue of the company was ~โน3 crore.
Incorporated in 1990, Persistent Systems Limited is amongst the worldโs leading providers of product engineering services, platformbased solutions and IP (intellectual property) based software products for global customers. It derives a significant portion of revenue from export of software services and products. It is engaged in providing product and services such as Product & Platform Engineering, CX (customer experience) & Design-Led Transformation, Data & Artificial Intelligence, Cloud-enabled Enterprise Modernization. On 4th May 2022, the company completed its acquisition of MediaAgility Inc., USA and its subsidiaries in the UK, Mexico, and Singapore. MediaAgility is a global cloud transformation services provider with deep expertise in building scalable, cloud-based solutions as a Google Cloud Premier Partner. The total purchase consideration payable for the acquisition of MediaAgility is $71.7 million. MediaAgility had a consolidated revenue of $25.5 million as on LTM December 2021. On 1st March 2022, they acquired businesses from Data Glove IT Solutions Private Ltd, India, Data Glove Inc., USA and its affiliate entities based out of Australia, UK, Singapore and Costa Rica (together referred to as โData Glove Groupโ) for $90.5 million. Data Glove Group specializes in providing services across the entire Microsoft Product Suite including Azure based digital transformation, data modernization, cloud advisory services, business application innovation, workspace modernization and intelligent automation. They had total annual revenue for CY21 of $48.9 million and over 700 employees worldwide. In Q4 FY24, the company launched โSASVAโ, a manageable and secure AI platform that solves complex and specialized use cases in the enterprise setting. It revolutionizes software engineering, with an AI-powered platform leveraging Large Language Models and Machine Learning. It drives enhanced efficiency and agility for organizations across industries by automating and optimizing software engineering lifecycle. During Q2 FY25, they acquired 100% stake of Arrka, a Pune based company renowned for its decade-long privacy expertise, its pioneering Data Privacy Management platform and growing expertise in AI governance. Arrkaโs data privacy management platform enables organizations to manage their data privacy risks and comply with multi-jurisdictional legal & regulatory requirements in an integrated manner. The consideration stood at ~โน14 crore and FY24 revenue of the company was ~โน3 crore.
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#SALES #GROWTH 5 Year CAGR 23.9%
Revenue during FY24 stood at โน9,822 cr, up by 17.6%. The TCV grew by 13% to $1,829 mn in FY24, out of which new deals increased by 19% to $1,130 mn. Despite a weaker demand environment coupled with higher furloughs, the growth was robust due to uptick in existing as well as new client accounts, deal ramp ups along with a healthy deal pipeline, increased efficiency and higher employee utilisation. The growth was broad-based across verticals & geographies. Healthcare is leading the growth followed by BFSI & Technology. Revenue in 9M FY25 was โน8,697 cr, up by 20%. TCV in 9M stood at $1,586 mn, higher by 15% YoY. Out of this, new TCV was $1,034 mn, up by 25% YoY. During Q3 FY25, they won their highest ever deal of $150 mn with tenure of 7 years from a US-based financial service company. The growth was broad based across verticals & regions led by Healthcare, North America & RoW. Client growth was robust across buckets.
Revenue during FY24 stood at โน9,822 cr, up by 17.6%. The TCV grew by 13% to $1,829 mn in FY24, out of which new deals increased by 19% to $1,130 mn. Despite a weaker demand environment coupled with higher furloughs, the growth was robust due to uptick in existing as well as new client accounts, deal ramp ups along with a healthy deal pipeline, increased efficiency and higher employee utilisation. The growth was broad-based across verticals & geographies. Healthcare is leading the growth followed by BFSI & Technology. Revenue in 9M FY25 was โน8,697 cr, up by 20%. TCV in 9M stood at $1,586 mn, higher by 15% YoY. Out of this, new TCV was $1,034 mn, up by 25% YoY. During Q3 FY25, they won their highest ever deal of $150 mn with tenure of 7 years from a US-based financial service company. The growth was broad based across verticals & regions led by Healthcare, North America & RoW. Client growth was robust across buckets.
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#EBITDA #GROWTH 5 Year CAGR 24.7%
EBITDA during FY24 was โน1,676 cr, up by 10% YoY. Employee costs were higher by ~20% as the company continued to invest in freshers. The sub-contracting costs were up by 10%, due to the initial ramp up of certain large deals, which led to the onsite effort rise. Despite these, profitability was higher as revenue growth was strong along with increased utilisation and efficiency. EBITDA stood at โน1,474 cr in 9M FY25, up by 21% YoY. Employee costs were higher by 14% YoY while cost of professionals were higher by 63% due to uptick in onsite resources owing to ramp up of a healthcare deal. Other expenses were higher by 11% YoY.
EBITDA during FY24 was โน1,676 cr, up by 10% YoY. Employee costs were higher by ~20% as the company continued to invest in freshers. The sub-contracting costs were up by 10%, due to the initial ramp up of certain large deals, which led to the onsite effort rise. Despite these, profitability was higher as revenue growth was strong along with increased utilisation and efficiency. EBITDA stood at โน1,474 cr in 9M FY25, up by 21% YoY. Employee costs were higher by 14% YoY while cost of professionals were higher by 63% due to uptick in onsite resources owing to ramp up of a healthcare deal. Other expenses were higher by 11% YoY.
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#PAT #GROWTH 5 Year CAGR 25.5%
PAT stood at โน1,093 cr, up by 19% YoY. Finance costs reduced by 1% due to lower borrowings, while depreciation expenses were up by 14%, due to higher facilities. Other income were higher by ~82%. Higher revenue growth & income and cost optimization helped offset the higher expenses leading to strong growth in profits. Forex gain during the year was โน8.5 cr as compared to a loss of โน13.3 cr. PAT in 9M FY25 stood at โน1,004 cr, an increase of 29% over 9M FY24. Finance costs were higher by 32% YoY while depreciation decreased by 1% during the same period. Other income was higher by 23% YoY at โน120 cr during 9M FY25. Other income included one-time gain of ~โน8 cr in Q2 FY25 owing to gain on closures of the Pune & Indore facilities. The forex gain during 9M FY25 was ~โน24 cr v/s โน10 cr in 9M FY24.
PAT stood at โน1,093 cr, up by 19% YoY. Finance costs reduced by 1% due to lower borrowings, while depreciation expenses were up by 14%, due to higher facilities. Other income were higher by ~82%. Higher revenue growth & income and cost optimization helped offset the higher expenses leading to strong growth in profits. Forex gain during the year was โน8.5 cr as compared to a loss of โน13.3 cr. PAT in 9M FY25 stood at โน1,004 cr, an increase of 29% over 9M FY24. Finance costs were higher by 32% YoY while depreciation decreased by 1% during the same period. Other income was higher by 23% YoY at โน120 cr during 9M FY25. Other income included one-time gain of ~โน8 cr in Q2 FY25 owing to gain on closures of the Pune & Indore facilities. The forex gain during 9M FY25 was ~โน24 cr v/s โน10 cr in 9M FY24.
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#EBITDA #MARGIN
EBITDA margin in FY24 stood at 17.1% as compared to 18.2% in FY23. One-time costs due to the transitioning of ramp up of multiple large deals, higher onsite mix, higher travel costs, wage hikes all led to impact on the margins. In 9M FY25, EBITDA margin stood at 16.9%, flat YoY. One-time visa costs, higher SG&A (selling, general & administrative costs), wage hikes, ESOP costs, lower earn-out reversals, had negative impact on margins. These headwinds were offset by right shoring, pricing, increased utilization, operational efficiencies, and forex.
EBITDA margin in FY24 stood at 17.1% as compared to 18.2% in FY23. One-time costs due to the transitioning of ramp up of multiple large deals, higher onsite mix, higher travel costs, wage hikes all led to impact on the margins. In 9M FY25, EBITDA margin stood at 16.9%, flat YoY. One-time visa costs, higher SG&A (selling, general & administrative costs), wage hikes, ESOP costs, lower earn-out reversals, had negative impact on margins. These headwinds were offset by right shoring, pricing, increased utilization, operational efficiencies, and forex.
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#PAT #MARGIN
The company recorded a PAT margin of 11.1% in FY24 as compared to 11% in FY23. The margins were slightly up due to lower finance costs and higher other income. PAT margin stood at 11.5%, up by 80 bps YoY. The company was able to modestly sustain margins backed by revenue growth, higher other income along with lower depreciation costs
The company recorded a PAT margin of 11.1% in FY24 as compared to 11% in FY23. The margins were slightly up due to lower finance costs and higher other income. PAT margin stood at 11.5%, up by 80 bps YoY. The company was able to modestly sustain margins backed by revenue growth, higher other income along with lower depreciation costs
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#ROCE
ROCE for FY24 was 31.26%. PBIT during the year stood at โน1,494 cr, while capital employed stood at โน5,054 cr. It increased majorly due to higher current assets.
ROCE for FY24 was 31.26%. PBIT during the year stood at โน1,494 cr, while capital employed stood at โน5,054 cr. It increased majorly due to higher current assets.
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#ROE
In FY24, the ratio stood at 25.86%. Net profit increased to โน1,093.5 cr, while the net worth stood at โน4,957.7 cr. Net worth increased majorly due to higher profits.
In FY24, the ratio stood at 25.86%. Net profit increased to โน1,093.5 cr, while the net worth stood at โน4,957.7 cr. Net worth increased majorly due to higher profits.
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#Company #potential
โข According to the Future of technology Servicesโ Winning in this Decade, published by NASSCOM, Indian technologies services industry is forecasted to grow 10%-12% to reach $300-$350 bn revenue and share of digital in Indian technology services revenue is likely to be 55%-60% by 2025 with an annual growth of 25%-30%. โข The average tech spending of global enterprises stood at 3% of their revenue which is expected to move to 5% of revenue by 2030. By FY26, ~51% of IT spending is expected to shift from traditional solutions to public cloud as compared to 41% in FY23. โข India is the topmost off-shoring destination for IT companies across the world. Having proven its capabilities in delivering both onshore and off-shore services to global clients, emerging technologies now offer an entire new gamut of opportunities for top IT firms in India. grow exponentially in the near future. โข The country's cost competitiveness in providing IT services, which is approximately 3-4 times more cost-effective than the US, continues to be its unique selling proposition in the global sourcing market. โข Companies are actively exploring opportunities for digitization, leading to increased demand for consulting services. Digital technologies and next-generation technologies such as 5G, AI/ Intelligent Enterprise, robotics and blockchain, are anticipated to โข Cloud technology is a priority for majority of the organizations, while cyber-security concerns are at the top of mind of CEOs. AI, automation, data analytics, IoT and robotics will be the key drivers of the future tech stack.
โข According to the Future of technology Servicesโ Winning in this Decade, published by NASSCOM, Indian technologies services industry is forecasted to grow 10%-12% to reach $300-$350 bn revenue and share of digital in Indian technology services revenue is likely to be 55%-60% by 2025 with an annual growth of 25%-30%. โข The average tech spending of global enterprises stood at 3% of their revenue which is expected to move to 5% of revenue by 2030. By FY26, ~51% of IT spending is expected to shift from traditional solutions to public cloud as compared to 41% in FY23. โข India is the topmost off-shoring destination for IT companies across the world. Having proven its capabilities in delivering both onshore and off-shore services to global clients, emerging technologies now offer an entire new gamut of opportunities for top IT firms in India. grow exponentially in the near future. โข The country's cost competitiveness in providing IT services, which is approximately 3-4 times more cost-effective than the US, continues to be its unique selling proposition in the global sourcing market. โข Companies are actively exploring opportunities for digitization, leading to increased demand for consulting services. Digital technologies and next-generation technologies such as 5G, AI/ Intelligent Enterprise, robotics and blockchain, are anticipated to โข Cloud technology is a priority for majority of the organizations, while cyber-security concerns are at the top of mind of CEOs. AI, automation, data analytics, IoT and robotics will be the key drivers of the future tech stack.
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#COMPANY #OUTLOOK
โข They aim to deliver a revenue of $2 billion by FY27 and $5 billion by FY31. Strategic levers around FY31 plans would be shared in the subsequent quarters. The company reiterated to raise their EBIT margins by ~200-300 bps by FY27 as the company scales up. Improving operational parameters like efficient utilization, better offshore & onshore mix and pricing would aid in boosting margins. โข In terms of segments, moving ahead, they expect majority growth from the healthcare space followed by BFSI and then Hi-Tech. โข The comfortable utilization rate ranges for the company would be ~83%-85%, going ahead. โข The company is confident of its growth on account of a healthy deal pipeline and no signs of weakness is anticipated. โข The company would focus on enhanced service offerings to drive revenue growth going ahead and cost optimization levers around employee costs & efficiency to drive margin expansion. This would lead to a healthy growth in the coming quarters. โข The medium-term margin levers would be efficient utilization rate, right shoring of employees, pace of higher investments normalizing which would lead to lower SG&A costs, sustained growth momentum, right pricing as well as differentiated offerings. Additionally, its platforms (SASVA & iAura) have higher margins and the uptick in those deals would aid margin expansion. โข The revenue target for FY31 would be driven by scaling up of the 3 core verticals, doubling down on the Top 100 customers that contribute ~80% to the companyโs revenue, expanding alternate channels like private equity & sourcing advisors and enhancing focus on global capability centres through infusion of digital capabilities and AI.
โข They aim to deliver a revenue of $2 billion by FY27 and $5 billion by FY31. Strategic levers around FY31 plans would be shared in the subsequent quarters. The company reiterated to raise their EBIT margins by ~200-300 bps by FY27 as the company scales up. Improving operational parameters like efficient utilization, better offshore & onshore mix and pricing would aid in boosting margins. โข In terms of segments, moving ahead, they expect majority growth from the healthcare space followed by BFSI and then Hi-Tech. โข The comfortable utilization rate ranges for the company would be ~83%-85%, going ahead. โข The company is confident of its growth on account of a healthy deal pipeline and no signs of weakness is anticipated. โข The company would focus on enhanced service offerings to drive revenue growth going ahead and cost optimization levers around employee costs & efficiency to drive margin expansion. This would lead to a healthy growth in the coming quarters. โข The medium-term margin levers would be efficient utilization rate, right shoring of employees, pace of higher investments normalizing which would lead to lower SG&A costs, sustained growth momentum, right pricing as well as differentiated offerings. Additionally, its platforms (SASVA & iAura) have higher margins and the uptick in those deals would aid margin expansion. โข The revenue target for FY31 would be driven by scaling up of the 3 core verticals, doubling down on the Top 100 customers that contribute ~80% to the companyโs revenue, expanding alternate channels like private equity & sourcing advisors and enhancing focus on global capability centres through infusion of digital capabilities and AI.
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Persistent Systems 4200-4890
Expected level 6000
Support 4000
Expected level 6000
Support 4000
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