Persistent Systems: A Differentiated Play in IT Outsourcing

Persistent Systems
A Differentiated Play in IT

Content Index
• Persistent Systems– Investment Snapshot :- Slide #3

• Outsourced Product Development ( OPD ) – An Overview :- Slide #5

•Technology Refreshment Cycle – An Overview :- Slide #11

• Persistent Systems– Business Overview :- Slide #14

• Investment Rationale :- Slide #22

• Persistent Systems – Financials:- Slide #27

• Conclusion :- Slide #31

“ Specialists in discovering Multibagger stocks “

Persistent Systems – Investment Snapshot (As on May 18, 2012)
Persistent Systems is a leader in the outsourced product
Recommendation :- BUY development (OPD) space where it helps build software
products with services across all phases of the product
Accumulation Range :- 330-350 lifecycle. There is no comparable listed peer in the Indian
markets and is a differentiated play from other IT firms.
Current Market Price – Rs. 349.85
Persistent has a very strong clientele and works with
Bloomberg / Reuters Code – PSYS IN / PERS.BO marquee names like Microsoft, IBM and also substantial
part of its earnings (~25%) comes from start-ups which
BSE / NSE Code – 533179 / PERSISTENT helps it to be ahead of the technology curve.

Mkt Cap (INR BN / USD Mn) – 140.6 / 258.97 OPD market has gained momentum after the economic
[1 USD – Rs. 54.29] downturn and the company has seen strong growth for
the past 3 years and is expected to continue going
Total Equity Shares [Mn]– 40 forward.

Face Value – Rs. 10 Persistent management has guided a strong growth on
top line of about 24% and also intends to maintain the
52 Week High / Low – Rs. 409 / Rs. 281 PAT at about 140Cr for FY 12 in spite of substantial
increase in tax rates. Company expects the strong
Promoter’s Holding – 38.95% demand to continue.

Institutional Holding – 32.98% Persistent is trading at wonderful valuations and we feel
that the stock deserves a re-rating considering the quality
of earnings and the strong cash generating potential.


Key Investment Highlights
Strong Operations– Persistent systems is a well established player in the OPD market and has grown at a fast pace
over its mid-cap peers. It has grown at a CAGR of 29% or 3.5x over FY06-11. Company’s growth rate through the
global recession shows the resilience of the business model. Persistent has a strong domain focus and also at the
fore-front of adopting new technologies. Persistent helps companies architect their products and provides services
covering the entire lifecycle of product development.

Significant Competitive Advantage– Persistent has a strong moat in the form of client’s trust which is a very big
entry barrier for newer players. Persistent has nurtured this relationships over the years and hence been able to
work on important projects of its customers. Persistent has a strong product development culture and a value
focused business model built over the past two decades which is not easy to replicate.

Strong Clientele– Persistent has a very strong clientele of around 300 customers of which nearly 40 customers have
a revenue above 1 Billion $’s. They include marquee names like IBM (Since 2001), Microsoft (1993), Intel (2000),
Oracle(1997) and Salesforce.com . Persistent’s clients on an average spend more than 10% of their top line in R&D
which provides significant scope for customer mining. Growing relationship over the years and over 90% revenue
from repeat customers are witness to the quality of Persistent’s work.

High Quality Management– Persistent has very strong corporate governance processes which can be seen from its
board composition (Quality Independent Directors), CSR activities and the transparency of the company even while
it was private. Company has long term PE investors like Norwest Partners, Gabriel Partners who also bring in rich
start-up contacts.

Attractive Valuation– Persistent systems is trading at wonderful valuations considering its earnings quality and its
differentiated focus. Company is trading at a EV/EBIDTA of 4.4 on FY 13(E) which is cheap for a company which has a
ROCE of over 23%. Persistent deserves a premium when compared with its midcap peers and hence ready for a re-
rating in its price.


Outsourced Product Development ( OPD )–
An Overview


What is OPD ?
• Outsourced Product Development (OPD) refers to the outsourcing of a part of software development to third
party vendors (TPV) by the Independent Software Vendors (ISV) like Microsoft, Oracle etc. OPD is a rapidly
growing segment within outsourced software services and includes all kinds of activities like research, prototyping,
development, testing, documentation deployment, maintenance etc.
Why OPD ?
• With heightened customer demand and ever increasing demand to cut down product cost and crunch time to market,
ISV’s can remain competitive only by,

 Reducing Product Lifecycle
 Preventing Product from reaching the stage of technology obsolescence
 Building Modular, Tightly integrated product to add on functionality
 Focusing on new competencies.

According to a study, Profitability is directly proportional to crashed time to market, number of release and indirectly
proportional to number of bugs.

Product Profitability = K *(Shortened Time)*(Number of Release)/ (Number of error)

By Outsourcing Product Development, companies are able to shorten time to market , increase number of releases,
decrease bug. The value K is value factor (expertise) which outsourcing service provider further brings to the table.

ISV’s are able to get scalable delivery, mature project management practices, reduced management bandwidth and
improved reliability.


Indian ER&D Market

 India’s Engineering R&D outsourcing market is expected to grow at a fast pace and its estimated that by 2020, India can
capture 40% of the global ER&D spend due to a strong diverse service provider pool, large trained workforce and
moving up the value chain by Indian Service Providers.
 Persistent Systems focuses mainly on the three verticals of Telecom, Infrastructure & Systems and Life Sciences.


Phases Of Outsourcing

1.) Labor Cost Efficiency- To reduce cost

2.) Process Efficiency- To improve quality

3.) Design Efficiency- Design for
manufacturing (DFM)

4.) Innovation Efficiency- Original Design
& Manufacturing (ODM)

• Global Outsourcing of product development to TPV’s have grown significantly after the economic downturn
which forced the IPV’s to look for efficient partners who add value to their product development.

• The four phases shown above are the trends seen in outsourcing of product development in Industries like
semi-conductors, automobile and electronics. Software development is probably between the 2 nd & 3rd
phase of evolution and it is expected that within a decade it will reach the matured phase of original design
and hence enable OPD companies to move up the value chain and create huge growth opportunities.


Disadvantage of Captives
• In a bid to leverage the cost advantages, better access to skills
and for catering to local markets, a number of large captives
have been established in India by major product companies like
IBM, Oracle, Microsoft etc.

• It can be seen from the fig that the size is large enough to
accommodate both the TPV’s and captives. Most of the top 25
clients have a sizeable offshore presence in the form of captives
but still find value with Persistent. Though , majority of the work
is still done by the captives there is a strong case for it to change,

 TVP’s like Persistent with their IP leveraged and process oriented delivery have an advantage over
captives in decreasing the time to market of the product.

 Changing market scenario because of disruptive technologies like cloud computing, mobility, analytics
& collaboration are driving product strategies which the TPV’s are good at.

 Lack of flexibility among captives due to higher overheads as compared to scale advantages of large
TPV’s which enables them significant cost savings.

 TPV’s have a broad based and deep exposure to large number of clients which gives them experience
and knowledge when compared with captives and hence are able to perform effectively.


IT Service Players Vs OPD Players

Target Customers : Broad Set of Enterprises like GE Independent Software Vendors (ISV’s) like Oracle

End Customer: Clients themselves Client’s customers

Value Proposition: Reduces fixed costs and improves Reduces time to market, Variable costs and adds value
efficiency
Engagement Models:

More Annuity Less Annuity
based Business based business but
in maintenance repeat Business
contracts. from product
upgrades.

Customer Stickiness: Low due to non-core work and the High stickiness due to involvement of sensitive work
scalability for a new player is relatively easy. and presence of high engineering skills & hence
difficult for a new player to develop the requisites.

Scope: All Fig 2008 -09 -10 -11 - 12 A - 13 E Offshore 2008 -09 -10 -11 -12 A -13 E
in US $ Bn R&D/ Prod
Develop
IT SVCS Spend 544 541 555 578 606 639 Spend 7.7 8 9 10.7 13 16.1

YoY Growth % 5.4 -0.6 2.6 4.1 4.8 5.4 YoY % 4.1 3.9 12.5 18.9 21.5 23.8

Technology Refresh Cycle– An Overview


Shifts in Technology
• World is rapidly changing with increasing
use of APPS across platforms like Ios,
Android, Nokia-Windows, Blackberry etc.

• There has been a paradigm shift in the
business of IT Products market due to the
evolution of new technologies and the way
the products are deployed to customers.

• The world is going through a technology
refresh cycle after the global economic
downturn and the first refresh cycle after
the Y2K boom.

• This refresh essentially enables all the
companies to upgrade their existing IT
systems which run on old technologies to
more efficient and better IT in order to
drive business growth.

• This refresh cycle creates demand for new IT Products and embrace new technologies which is good for
OPD players like Persistent Systems because of the increased product development.

• Some of the major changes have been the shift from Capex to Opex model and viewing Software as a
Service (SaaS). Last refresh cycle enabled businesses to move to the web platform and this refresh cycle is
driven by the increasing mobility and cloud based services.


New Technology Trends
Cloud Computing Enterprise Mobility Analytics Enterprise Collaboration

•Cloud Computing: It encompasses a general shift of computer processing, storage and software delivery away from the
desktop and local servers to next generation common data centers maintained by infrastructure companies like Google, IBM
& Microsoft. Cloud computing offers end-customers the chance to consume services on pay per use basis. It ensures better
resource utilization through resource sharing and lower costs due to economies of scale.

•Enterprise Mobility: With the proliferation of smart phones and advanced mobile devices like IPod's, Tablets etc, there is a
constant demand for new/ upgraded applications running on these devices. Businesses are changing to take advantage of
this large growing space.

•Analytics: Global data has been growing exponentially with the advent of large users entering the web. Hence, there is a
strong need for processing and managing large volumes of data which is driving analytics. Big Data is a new phenomenon.

•Enterprise Collaboration: Collaboration involves designing applications or products that use web as a participation
platform leading to highly active user-centric environment with a lot of user-generated content and interaction amongst its
users. Corporate’s across the globe are latching on to these tools for better productivity.


Persistent Systems – Business Overview


Key Highlights
Differentiated Play with
Strong Growth Drivers
Persistent Systems is an end to end
player in the outsourced product
development space.

Company has strong growth drivers
Strong Balance Sheet and business demand is buoyant. Robust Clientele
Persistent has a strong balance Persistent has a robust clientele of
sheet with little debt and enough both large marquee names and
leverage for new investments. start-ups to the tune of about 300
customers with the top 10
It has done good acquisitions in Persistent customers contributing to nearly
the past and can expect this cash 50% of its revenues.
to be spent judiciously. Systems
Thought Leadership in Non-Linear Revenues
Emerging Technologies Persistent has invested and created
Persistent’s investment in new a large number of IP products which
emerging technologies like cloud, have higher margins and generate
mobility, analytics & collaboration non-linear revenues.
during the slowdown has started to
yield results with nearly 40% of It is expected to generate more than
revenue from these technologies. 20% from IP led business in FY15


Product Development Skills

•Persistent is present across the entire value chain of product engineering business and helps clients to build products
efficiently at a low cost in a short period of time.

•Persistent helps web 2.0 companies to architect their products on a scalable and efficient platform. Persistent end to end
services provides clients bandwidth to focus on product ideation and their sales/ distribution.

•Nearly , 40-45% of Persistent’s revenues comes from new technologies like Enterprise mobility, Analytics, Cloud computing
and Enterprise collaboration.

• Persistent Systems recently developed Exploriments Mobile learning Apps for the global Ipad community which shows the
flexibility of the organization and being on top of new trends.


Focus Verticals & Technologies

Cloud Computing (% of total Revenues: 10 %): Software companies are re-designing their products to operate with high
degree of multi-tenancy. Persistent systems is partnering with leading vendors to enable software companies to migrate
their products to the cloud platform. Persistent helps companies like IBM, Microsoft who sell cloud based products/
platforms to build the requisite infrastructure.

Analytics (10%): Persistent’s expertise of processing and managing large volumes of data through data mining, statistical
techniques and virtualization is used to deliver domain specific insights to customers.

Enterprise Collaboration (15%): Persistent has been working with companies to build products that leverage technologies
across e-mail and messaging, text mining and analytics, social networking and web 2.0. Persistent builds frameworks to
integrate diverse collaboration tools.

Enterprise Mobility (7%): Persistent has been working with handset manufacturers, wireless network equipment
companies to build solutions like enterprise wide mobility platform which helps their clients to come on-board mobile
platforms. Company’s early focus has enabled it to reap rich rewards.

Selling Models
Time & Expense Model Fixed Price (FPP) Turnkey Revenue Sharing/ Risk Reward
(Offshore Development Projects
Center Model)
Dedicated Teams extend Clear Requirements and Complete product ownership
customer engineering. change management process. for maintenance, road map
ownership and upgrades.
Onsite team with primary Initial Onsite presence for Onsite and offshore presence
offshore execution. requirements phase. as appropriate.

Flexible ramp-up and Flexible in on-tap experts Launching new products
ramp-down suitable for available on short term together in new markets, Road
ongoing co-development assignment. Suitable for map extensions etc.
and quality analysis. (QA) performance/ Usability
engineering, POC’s, QA
automation and fixed
requirement projects.

Revenue % : 79.7 11.5 8.8


Non- Linear Revenues
•IP (Intellectual Property) led revenues are non-
Growth of High Margin IP Business linear where there is no co-relation of its growth
25 with manpower growth or expense growth.
20
•Persistent having a product development
15 culture has invested significant amount of
10 energy and time in building IP based products
% IP in total like connectors and these have high margin of ~
5 60% which will lead to higher ROE’s.
revenues
0
•IP share in overall revenues is consistently
Fy Fy Fy Fy Fy Fy Fy
increasing and is expected to touch 20% before
07 08 09 10 11 12 15 2015. These IP’s also help in differentiating
(E) (E) Persistent with other TPV’s.
•Persistent has been constantly spending approximately 5% of the technical time of building IP based
products and also investing 5% of its revenue for research.

•Persistent has a “Sell With” strategy where it ties-up with large ISV’s and cross sells its IP’s with the large
customer base of the ISV’s thus creating value. Persistent also helps the customers of ISV’s like
salesforce.com to get on to its cloud platform.

•Persistent has “Sell With” tie-ups with Nokia and Salesforce.com vindicating its strong relationship. It has
also re-selling partnerships where it adds value/ customizes the current product of client and re-sells it.


Inorganic Growth
Date Acquired Company Rationale

October, 2005 Control Net Domain Based Skills

July, 2007 Metrikus (Certain Assets) Domain Based Skills

October, 2009 Paxonix (Certain Assets) Exposure to their brand management
solutions product
February, 2011 Infospectrum Footprint in Europe, New clients, Exposure to
newer domains like imagery
May, 2011 Agilent Technologies Increase presence in Life Science’s market
and geographic expansion in Europe
Feb, 2012 Openwave Systems High Growth Location Business

• Persistent’ Management has been pragmatic in spending cash on acquisitions and at the same time has
been active in acquiring good assets which provide either technology skills, expansion to new geography or
new clients.

• Persistent has a very strong balance sheet with nearly 400 Crs of Cash & Equivalents + Net Current Assets.
This cash can be used positively for acquiring good companies thus providing for inorganic growth.


Strong Clientele
Clients with 5+ > 45%
Revenue In % Client Engagement Size Nos years of
Concentration relationship
Large > $3 Mn 11
Top 1 16.1 Medium >$1 Mn & < $3 Mn 26 Repeat ~ 91%
Top 5 37.4 Small upto $1 Mn 314 Business
Top 10 48.6 Total 351 % Of Revenues ~25%
from Start-Ups

• Persistent over the years has built strong relationships with its customers and thus established a sense of
trust which will help it to scale the work done for clients and hence grow the clients accounts.

• Persistent’s quality of clients can be seen from all parameters like client diversification, relationship
timeline and the percentage of repeat business.

• Persistent has nearly 40 clients who have a revenue of > 1 Bn $ and spend 10% of their revenue in R&D.
These accounts can be mined strongly to grow the business and we are seeing indications of increased
mining from the inductions seen in Sales & Marketing areas which will help to farm the existing large clients.

• Persistent has increased the > $10 Mn clients from 1 in FY-10 to 5 in FY-12.


Investment Rationale


Competitive Advantage
Independent Software Start -Ups
Vendors ( ISV’s)
Persistent
Private Equity players Systems System Integrators

Venture Capitalists Research Institutions

•Persistent has a very strong moat in the form of client stickiness which is very important in this business
because of the high level of sensitive work involved. The OPD Provider must have the trust of the client to
move up the value chain and get high engineered work.

•Persistent’s focus on OPD segment for the past two decades has enabled it build a strong relationship with
several players involved in the segment which can be seen in the diagram above. A new player entering the
space can’t build it easily and companies which intend to enter this space will have to make an acquisition of
the existing player.

•Persistent’s work with start-ups help it to be at the forefront of emerging technology trends which help in
building quality IP products which can be leveraged while working with large enterprises.

•The time and energy invested by Persistent in creating IP based products which help in reducing the Time to
Market for developing products in certain focused verticals serve as a moat which is difficult to replicate.


Strong Volume Growth & Accolades

• Persistent System has seen very strong growth sequentially on the top line with average > 5% growth
(Q0Q) for the past 10 quarters indicating strong demand. Persistent has been growing faster than the
industry at a very healthy pace for the past 5 years.

• Persistent’s management had been able to meet their guidance for FY-12 in spite of tough environment
conditions where almost every IT major missed their guidance or revised them downwards.

• Zinnov Management consulting, a leading globalization advisory firm in its global R&D service provider
ratings for the year 2010-11 has recognized Persistent as one of the leading service provide in two key
“Zinnov Zones” of cloud computing and Software/ ISV R&D which recognizes the work of Persistent.

• Persistent in-line with its strategy of working with large enterprises has recently tied up with Nextel &
Realcom to assist their product development. It has also tied up with IBM on Big Insights. Company is
working several high tech projects like robotics, Instrumentation etc.

•Persistent is a part of 1M/1M initiative which aims at helping 1 million entrepreneurs reach 1 million $
revenue and this provides it a good platform for collaborating with small new age start-ups.

Concerns
 Margins & Growth in Bottom Line: Bottom line growth lagging the top line growth has been a strong
concern along with a dip in EBIDTA margin of around 390 bps. There are concerns on margins going
forward but we still expect the company to maintain a healthy EBDITA of around 20% for next 3 yrs.
 Tax Rate: The big hit on the PAT margins this year came from the increase in tax rate from about 7% in
Fy-11 to about 30% in Fy-12 due to the withdrawal of tax concessions on software exports. This is not a
surprise and the management has been guiding it for a long time.
 Small Client Accounts: Another concern has been the small client account in spite of having strong
clients and the management actions on this can be seen from the appointment of Mr. Hariharan, Mr.
Ramnath Puranik, Mr. Micheal Kerr, Mr. Bradley Scott and Dr. Jorg Turmhoff over the past 3 years to
improve the client relations and mine more business and the results have been encouraging.
 Wage Inflation: Wage Inflation has been witnessed by everyone in the Industry and we expect salary
increments to come in the next 3 months which will have a small effect on margins.
 No Pan- Indian Presence: Persistent is more localized in Pune and is expanding in Nagpur and Goa. We
expect the company to spread its geographical presence as the company grows.
 Attrition: It has been a very serious concern for the entire industry and Persistent’s salary increments
will help it in at least maintaining the attrition rate at the current 19%. India with a large base of
employees will be able to meet the demand arising out of hiring.
 H1 B Visa Issue: Persistent doesn’t have a short term problem as it has enough visa’s but can be a
problem in the future if the scenario doesn’t change.
 Currency Risk: Foreign exchange change will have an impact on Persistent but over a period time it
should able to manage the risk by proper hedging.


Margin Levers

• Persistent has sufficient margin levers to maintain the EBIDTA margins at around 20% in the form of,

 IP based products which have a margin of more than 60% are expected to increase which will enable
better margins. Though IP revenue may be volatile on QoQ basis, it has tremendous potential in long run.

 Employee pyramid is broadening at the base and is expected to have higher utilization over the next few
quarters. This will accrue after the training of fresher's.

 Yield from work will increase gradually in the long term as the company gets more high end work.

 DTC which can be expected to get implemented within the next 2 years will help in getting the tax rate
down by about 200 bps which will directly flow into the bottom line and boost the PAT margin. We are not
considering it in our financial projections.


Financials


Earnings Projection
Y/E March ( Rs Cr) 2010 2011 2012 2013 (E) 2014 (E)

Revenue 601.2 776 1006 1158.6 1309.2

EBIDTA 146 158 196 263.8 301.7

Pre-Tax Profit 124 150 195 234.8 268.7

Profit after Tax (PAT) 115 140 141 169.1 196.1

EPS (Rs) 32.1 34.9 35.45 42.26 49.03

Cash Profits 149 182 191 232 264

Free Cash Flow 47 (95.3) 82.4 68.3 119.9

EV/ EBIDTA 7.8 7.2 6.4 4.4 3.7

ROCE (%) 17.5 19.3 23.2 24.3 23.5

ROIC (%) 45.7 34.1 26.6 27.3 30.5

Book Value 178.1 186.8 216.7 239.7 284.2


Management Quality
Share June Mar Dec Sep June • Persistent is promoted by first
Holding % 2011 2011 2010 2010 2010 generation technocrat entrepreneur
Dr. Anand Deshpande who is an active
Promoters 38.95 38.95 38.95 38.89 38.88 member of CII.

FII 2.67 6.28 6.12 6.95 9.40 • It is a professionally run organization
with high focus on corporate governance
DII 30.31 26.54 25.99 24.60 21.71 and strong board processes.

• More than 29% of its employees are
Notable Investors Share post-graduates with strong track record.
Holding %
• Investors like Intel have been with the company for more than
Norwest Venture 13.51 10 years and the employees are rewarded well with ESOP’s.
Partners (NVP)
•Existing investors holding to the stock for several years speaks
Employees ESOP 8.95 for the quality of the company.
Trust
• Management wants to surpass the guidance given by them
Gabriel Ventures 4.86 and earn investors respect as it is a newly listed company.

Intel Capital 2.29 • Company has been profitable since its inception and has been
doing CSR activities for the past several years.


Attractive Valuations
Hexaware Patni Polaris Mindtree Persistent

Top-line growth for past 3 7.99 4.6 13 26.82 18.8
years % CAGR

EBIDTA Margins ( FY 11) % 13.4 16.66 17.1 13.4 27.2

P/E (TTM) 11.58 10.2 5.4 11.9 10.52

• Since, there are not any pure-play OPD companies in the listed space we are comparing Persistent with the
midcap IT space. It can be seen from the table that Persistent has been quoting at wonderful valuations in
spite of having better parameters than the mid-cap IT space.

• Persistent has a healthy dividend payout ratio of 18% and the stock is currently quoting at a dividend yield
of 2.4% and P/B of 1.15 which is very cheap.

• Mindtree acquired Aztecsoft, a struggling pure play OPD player in 2008 at a valuation of around 360 Cr
which had a top line of 60 Million $ and even posted quarterly losses just before its acquisition.

• Business competitors of Persistent includes the captives of large ISV’s and pure play OPD players which are
held privately like Global Logic which is backed by Sequoia Capital.


Conclusion


Price chart

• Persistent Systems came out with an IPO on Mar, 2010 at 310/ share and was subscribed by over 93 times
and the demand was very high in the Qualified Institutional Buyer (QIB) with over 144 times subscription.
The share opened in the market at a price of over 400 Rs.

• It soon went onto touch new highs of over 480 but started to decrease because of the margin pressures
faced by the company and the general market conditions after Nov, 2010.

• After the correction, Persistent is available at wonderful valuations and an Investor can expect to generate
good returns by adding Persistent to his portfolio. Persistent is the best pick in the mid-cap IT space and will
outperform the sector returns.


Conclusion
Persistent Systems is a niche IT play on the growing OPD market. The trends are pretty strong and
persistent will continue to grow at a healthy pace considering its strong clientele and thought leadership in
emerging technologies. Moreover, with the increased dependence on Technology across Industries and
disruptive trends is resulting in good business prospects for Persistent Systems.

OPD growth is expected to be higher than the IT services growth for at least the next three years and
considering the competitive advantage of Persistent, it must be able to seize the opportunities which are
coming along its way in a profitable manner. Persistent Systems benefits from Mobile Revolution, IPAD/
Tablets penetration and huge grow of analytics using data like Social Media including Facebook and Twitter.

Considering the quality of earnings, niche space, strong management, good clientele and healthy balance
sheet, we feel that the company must trade at a premium to other mid-cap IT players. The company is also
quoting at a valuation discount of more than 45% with the bigger IT players which can be expected to
decrease by at least a few percentage points.

The company is presently quoting at a forward P/E of 5.89 and considering the earnings growth the
company can easily command a valuation of at least 14 on forward P/E and this re-rating will lead to good
gains on the counter which can be expected in coming months. Moreover the continuous pressure on Rupee
will benefit in expanding its margins further and we may revise estimated based on Rupee movement.

A Quality company whose ROCE is over 20% is available at around 1X forward Book which is cheap by
any parameters in spite of above average fundamentals and growth prospects. But considering the quality
of the company, it can be held as a long term holding in one’s portfolio. Persistent can deliver consistent
growth and is definitely a blue chip stock in the making.

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Persistent Systems: A Differentiated Play in IT Outsourcing

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