The management of Persistent Systems Ltd has indicated that it is aspiring to reach $1 billion in annual organic revenue in 6-8 quarters from now, ICICI Securities Ltd said in a note.
The management said it expects the growth momentum in the services business to continue and the intellectual property (IP) business to witness marginal growth in the near-term, followed by a gradual decline over the longer term.
The company called out following levers for margin expansion: a) They convert one large five-year contract from revenue sharing to service contract on account of lower-than-expected revenue for one of the particular products, which will raise margins to the company level in that project b) pyramid rationalization, guided for 2,500 fresher hiring in the next one year, c) improve utilization (guided for 83-84% stable range for utilization d) price hikes.
During the quarter, the company launched one of the most inclusive ESOPs (employee stock ownership plans), wherein 80% of its global workforce is expected to join. The company indicated this will have an impact of 70-80 basis points on margin in the short term, which would be largely offset over time.
Persistent Systems completed two acquisitions during the quarter— Software Corporation International (SCI) which has an expertise in payment solutions domain, and Shree Partners, a digital transformation company.
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