PERSISTENT SYSTEMS

EQUITY RESEARCH - MODEL

DISCUSSION ON EQUITY RESEARCH MODEL - PERSISTENT SYSTEMS
Investment stocks

fundamental approach

decision should I invest in the stock at the CMP

value of company = Intrinsic Value > CMP more than 15%

Project Company
starting t = 0 does not start at t =0
life is finite life is infinite (going concern)
assumptions were given to us we have figure out the drivers and take assumptions

IMPORTANT SECTIONS OF AN ANNUAL REPORT --> INVESTMENT ANALYSIS

1 CHAIRMAN'S SPEECH VISION & MISSION
2 DIRECTOR'S REPORT OPERATIONAL EXCELLENCE
3 MANAGEMENT DISCUSSION & ANALYSIS (MDA) COMMENTARY ON LATEST RESULTS
4 INDUSTRY REPORT DEMAND & SUPPLY OF THE SECTOR
5 FINANCIAL STATEMENT DATA (IS/BS/CFS)

Total Revenue = Price x Quantity

ANALYSIS OF MARUTI REVENUES
ASP (P)

Maruti x

Number of cars sold (Q)

ANALYSIS OF AIRTEL REVENUES

ARPU = MONTHLY BILL
MOBILE
 SUBSCRIBERS

AIRTEL BROADBAND

DTH

ANALYSIS OF IT SERVICES REVENUES

HOSPITAL IN USA
WANTS SOFTWARE FOR MGMT.

PERSISTENT IS THE VENDOR TO BUILD THE SOFTWARE

NO SALEABLE INTELLECTUAL PROPERTY

SO CHARGE THE CLIENT FOR EFFORT

HOW TO MEASURE THE EFFORT

MAN DAYS OR MAN MONTHS OR MAN HOURS

METRIC TO REVENUE ESTIMATION

NO. OF MONTHS TOTAL TOTAL
SERVICES DEVELOP OF EFFORT RATE PER MONTH REVENUE
PROVIDED AT ERS EFFORT MONTHS $/MONTH (USD)
ONSITE = GDC 1 10 10 10000 100000
OFFSHORE = INDIA 10 10 100 1000 100000
200000 <== TOTAL REVENUE ($)
50 <== INR/USD
10,000,000 <== REVENUE IN INR MILLION

REVENUE MODEL - PERSISTENT SYSTEMS

GDC - BILLING RATE (USD/MONTH)

GDC GDC - MONTHS BILLED

SERVICES
PERSISTENT INDIA INDIA - BILLING RATE (USD/MONTH)

INDIA - MONTHS BILLED

IP LED
IP - BILLING RATE (USD/MONTH)

IP- MONTHS BILLED

PERFECT COMPETITION
ENTRY BARRIER LOW
INFLUENCE OF PERSISTENT ON BILLING RATE NOT THERE

VALUATION OF COMPANY

DISCOUNTED CASH FLOW VALUATION RELATIVE VALUATION

PRESENT VALUE OF FUTURE CASH FLOWS IS FIRM VALUE LAW OF ONE PRICE
BASED ON VALUATION RATIOS
FREE CASH FLOW TO FIRM (FCFF) = THE AMOUNT OF CASH P/E, EV/REVENUE, P/S,P/BV
GENERATED FOR ALL STAKEHOLDERS OF FIRM
STAKEHOLDERS = DEBT + EQUITY FIND THE RATIOS FOR PEERS
THIS IS ALSO CALLED AS ENTERPRISE VALUE (EV)
EV = DEBT + EQUITY - CASH FIND THE INDUSTRY MEDIAN OR
25TH , 75TH PERCENTILE
FCFF = EBIT*(1-TAX) + D&A - PURCHASE OF ASSETS + CHG IN WC
USE THE INDUSTRY MEDIAN
DICOUNT RATE FOR FCFF IS WACC OR PERCENTILE VALUE
(CONSIDERING BOTH STAKEHOLDERS , DEBT & EQUITY) TO FIND TARGET PRICE OF OUR CASE
WACC = We * Ke + Wd * Kd

We = MARKET VALUE OF EQUITY / TOTAL CAPITAL

MARKET VALUE OF EQUITY = PRICE OF STOCK * NUMBER OF SHARES

Wd = 1 - We
Kd = INT RATE * (1 - TAX RATE)
Ke = Rf + BETA*(Rm - Rf) <=== CAPITAL ASSET PRICING MODEL (CAPM)
EV = PV OF ALL FCFF DISCOUTNED AT WACC

MATHEMAICALLY , EV WOULD BE

WE CAN ESTIMATE THE FCFF FOR NEXT 6 YEARS USING OUR FORECASTS
FOR THE REMAINING YEARS TILL INFINITE WE USE 2 STAGE BASED H-MODEL
OF VALUATION
THIS MODEL CONSIDERS THE BUSINESS LIFE CYCLE STAGES AND MODERATES THE
GROWTH RATE
STAGE -1 : LINEAR DECLINE IN GROWTH RATE OF PROFITS OR CASH FLOWS
STAGE -2 : TERMINAL VALUATION BASED ON GORDON GROWTH MODEL

GORDON GROWTH MODEL

PV = A/r

FROM EV WE CAN ESTIMATE THE EQUITY VALUE

AND THE INTRINSIC PRICE TO TAKE INVESTMENT DECISION
EQUITY VALUE = EV - DEBT + CASH
INTRINSIC PRICE = EQUITY VALUE / NUMBER OF SHARES
 REVENUE
DRIVERS
IS

COST DRIVERS

ESTIMATES OF
CFS
CASH FLOW

ASSET
SCHEDULE

BS

BALANCE
SHEET RATIO
HISTORICAL
FORECASTS
DATA
ANNUAL
REPORT
 DCF

VALUATION

RELATIVE
VALUATION

Intirinsic Price
> CMP
+15% BUY
INVESTMENT
DECISION
Persistent Systems
Layout
(All numbers in INR Million, Except per share data)
(Red for assumptions, Blue for Acutal data and Black for Calculations)
Date Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22
Year 2013 - A 2014 - A 2015 - A 2016 - A 2017 - A 2018 - A 2019 - E 2020 - E 2021 - E 2022 - E
Mar-23 Mar-24
2023 - E 2024 - E
Persistent Systems
Income Statement
(All numbers in INR Million, Except per share data)
(Red for assumptions, Blue for Acutal data and Black for Calculations)
Date Mar-13 Mar-14 Mar-15 Mar-16 Mar-17
Year 2013 - A 2014 - A 2015 - A 2016 - A 2017 - A

Revenue from Operations 12,945 16,692 18,913 23,123 28,784

Other Income 286 310 938 773 958
Total Revenue 13,231 17,002 19,851 23,896 29,743

Employee Benefit expense 7,188 9,090 11,114 14,068 18,008

Cost of technical professionals 536 906 1,090 1,587 1,818
COGS 7,724 9,995 12,203 15,654 19,827

Gross Profit 5,507 7,006 7,647 8,242 9,916

Other Expenses 2,094 2,553 2,806 3,554 4,304

EBITDA 3,413 4,453 4,842 4,688 5,612

Depreciation 783 1,026 939 990 1,490

EBIT 2,630 3,427 3,903 3,698 4,122

Interest Expense 0 1 3 1 1
EBT 2,630 3,427 3,900 3,697 4,121

Exceptional Items - (114)

PBT 2,630 3,427 3,900 3,697 4,007

Tax Expense 754 934 993 924 992

PAT 1,876 2,493 2,906 2,773 3,015

EPS
Basic 48.62 32.04 36.84 34.74 37.68
Diluted 46.90 31.16 36.33 34.66 37.68

Number of Shares
Basic 38.59 77.80 78.89 79.82 80.01
Diluted 40.00 80.00 80.00 80.01 80.01
Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Mar-24
2018 - A 2019 - E 2020 - E 2021 - E 2022 - E 2023 - E 2024 - E

30,337 32,839 37,272 42,303 48,015 54,499 61,860

1,191 - - - - - -
31,528 32,839 37,272 42,303 48,015 54,499 61,860

18,316 20,186 22,911 26,004 29,514 33,500 38,025

3,181 2,759 3,131 3,554 4,034 4,578 5,197
21,497 22,944 26,042 29,557 33,548 38,079 43,222

10,031 9,894 11,230 12,746 14,467 16,420 18,638

4,153 4,703 5,338 6,058 6,876 7,805 8,859

5,878 5,191 5,892 6,688 7,591 8,616 9,779

1,585
4,293

1
4,293

-
4,293

1,062
3,231

40.39
40.39

79.99
79.99
 Revenue foresting:-
=> It is the first forecasting that we do.
=> It is the first cash inflow coming from the operation.
=> It is considered as limiting factor forecasting.
=> All the other forecastinh will be directly or indirectly dependent on it.

Approach while forescating/creating assumption:-

=> We will take the past behaviour or the assumption variable and will follow the same behaviour in the future.
=> We will take the average of the latest relevant data of the assumption variable
and will keep it constant for the future
=> We will take the average of the latest relevant data of the assumption variable
but will keep the average moving
Persistent Systems
Balance Sheet
(All numbers in INR Million, Except per share data)
(Red for assumptions, Blue for Acutal data and Black for Calculations)
Date Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20
Year 2013 - A 2014 - A 2015 - A 2016 - A 2017 - A 2018 - A 2019 - E 2020 - E

Property, Plant and Equipment 2,800 2,785 3,021 2,968 2,768 2,581
Capital work-in-progress 1,174 307 40 24 48 8
Goodwill - 23 24 78 76 77
Other Intangible assets 702 1,269 995 1,325 2,515 2,464
Intangible assets under development - - - 242 241 45
Investments 173 823 2,308 1,469 2,339 2,881
Loans 199 138 58 86 131 143
Other non-current financial assets - 13 870 922 37
Deferred tax assets (net) 190 261 244 129 306 642
Other non-current assets 524 459 81 649 72 92
Total Non Current Assets

Investments 3,116 4,071 4,661 4,914 4,500 5,916

Trade receivables 2,451 3,028 3,586 4,275 4,754 4,847
Cash and Cash equivalents 561 957 987 1,400 1,461 1,344
Other bank balances - - 526 39 48 1,070
Loans 346 410 11 9 14 7
Other current financial Assets - - 909 1,764 2,316 2,758
Current tax assets (net) - - 20 153 94 114
Other current assets 434 902 397 803 855 1,563
Total Current Assets

Total Assets

Equity share capital 400 400 800 800 800 800

Other equity 9,783 11,823 13,901 15,778 18,193 20,472
Total Equity
Borrowings 14 32 26 27 22 17
Deferred payment liabilities 559 301 - - 20 -
Provisions 80 93 116 124 146 160
Deferred tax liabilities (net) - 1 3 - 111 270
Total Non Current Liabilities

Trade Payables 319 434 497 1,599 1,209 1,673

Deferred Payment Liabilities - - - 4 1 -
Other Financial liabilities - - 535 535 453 396
Other Current Liabilities 468 1,140 730 1,108 1,119 1,201
Provisions 1,048 1,211 1,274 1,224 1,391 1,599
Total Current Liabilities

Total Liabilities and Shareholders Equity

Checksum (ASSETS = LIABILITY + EQUITY) - - - - - -

Balance Sheet Ratios

DSO
Payable Days
Mar-21 Mar-22 Mar-23 Mar-24
2021 - E 2022 - E 2023 - E 2024 - E
Persistent Systems
Cash Flow Statement
(All numbers in INR Million, Except per share data)
(Red for assumptions, Blue for Acutal data and Black for Calculations)
Date Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22
Year 2013 - A 2014 - A 2015 - A 2016 - A 2017 - A 2018 - A 2019 - E 2020 - E 2021 - E 2022 - E

Profit before tax 2,630 3,427 3,900 3,697 4,007 4,293

Adjustments for:
Interest income (93) (91) (117) (148) (145) (162)
Finance costs 0 1 3 1 1 1
Dividend income (155) (150) (233) (227) (189) (171)
Depreciation and amortization expe 783 1,026 939 990 1,490 1,585
Amortization of lease premium - - - 1 1 1
Unrealised exchange loss/ (gain) (ne 9 58 (25) 68 88 (124)
Change in foreign currency translati 13 (34) (36) (37) (67) (28)
Exchange loss/ (gain) on derivative (90) 20 (11) 1 (70) 77
Exchange (gain) / loss on translatio (1) 19 (11) (8) (1) (101)
Donations in kind - - - - 0 0
Bad debts 31 46 99 205 115 184
Provision for doubtful receivables ( 94 27 (56) (196) 26 (151)
Employee stock compensation expe 28 - 32 34 60 4
Provision for doubtful deposits and - 0 2 0 - 27
Provision for diminution in value o - 0 - - 8 -
Remeasurements of the defined benefi - - - 223 (61) 148
Advances written off - 4 - 30 - (18)
Excess provision in respect of earlie (2) (2) (6) (0) (3) (24)
(Gain)/ loss on fair valuation of mu - - - 14 (191) 19
(Profit) on sale of investments (net) (13) (55) (85) (228) (94) (187)
(Profit) on sale of fixed assets (net) (4) 3 (3) (9) (2) (2)
Operating profit before working capital changes

Movements in working capital :

(Increase) / Decrease in non-current (82) (112) (18) 176 (50) (1)
Decrease / (Increase) in other non c - - - (51) 5 (3)
(Increase) in other current financial - - - - (163) 72
(Increase) in other current assets (160) (344) (157) (1,205) (52) (696)
(Increase) in trade receivables (609) (689) (576) (645) (688) 157
(Decrease) / Increase in trade payabl 130 501 202 924 (302) 306
Increase / (Decrease) in provisions 252 129 273 (57) 189 222
Working Capital Change
Operating profit after working capital changes
Direct taxes paid = Tax Expense (596) (977) (1,001) (1,012) (1,048) (1,214)
Net cash generated from operating activities

Payment towards capital expenditure (1,156) (581) (957) (1,659) (2,176) (655)
Proceeds from sale of fixed assets 4 3 3 12 7 3
Payment towards acquisition of subs - (32) - (307) - (408)
Purchase of tax free bonds - - - (243) (514) (595)
Proceeds from sale of tax free bond - - - 456 654 -
Purchase of non-current investment (50) (651) (6) (73) - -
Investments in mutual funds (10,908) (12,492) (15,451) (13,397) (10,789) (15,502)
Proceeds from sale / maturity of mu 9,846 11,591 13,702 14,023 10,472 14,290
Proceeds from sale of other current - - - 20 - -
Investments in bank deposits having (520) (24) (15) (523) (10) (326)
Investments in Deposit with financia (28) - - (300) (135) (595)
Maturity of bank deposits having or 921 42 100 400 - 42
Inter corporate deposits refunded 50 7 0 0 0 0
Interest received 101 28 74 202 82 101
Dividends received 29 150 233 227 189 171
Net Cash (used in) investing activities

(Repayment of) long term borrowin 8 18 13 (15) (5) (5)

Interest paid - - (2) (0) (2) (2)
Dividends paid (340) (440) (560) (1,040) (480) (800)
Tax on dividend paid (55) (75) (107) (212) (98) (150)
Net cash (used in) Financing activities

Net Change in Cash

Cash BOP 433
Cash EOP

Cash acquired on Acquisition - - - 293 - -

Effect of exchange differences 1 (19) 11 8 1 101

On unpaid dividend accounts 1 1 1 1 1 1

Cash From Balance Sheet

Cash In Deposits
Mar-23 Mar-24
2023 - E 2024 - E
Persistent Systems
Revenue Drivers
(All numbers in INR Million, Except per share data)
(Red for assumptions, Blue for Acutal data and Black for Calculations)
Date Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19
Year 2010 - A 2011 - A 2012 - A 2013 - A 2014 - A 2015 - A 2016 - A 2017 - A 2018 - A 2019 - E

Method -1 (y/y % Growth)

Revenue from Operations
y/y % growth

Method-2 (CAGR %)
Revenue from Operations 6,012 7,758 10,003
CAGR % - 8 Years

Method-3 (Segment Analysis)

Revenue % By Geography
North America 85.60% 82.50% 84.8% 85.1% 85.5% 85.5% 86.40% 83.50%
Europe 5.90% 7.30% 6.5% 5.4% 6.7% 6.5% 5.50% 7.50%
India 0.0% 0.0% 0.0% 0.0% 0.0% 6.7% 5.50% 6.30%
ROW 8.50% 10.20% 8.7% 9.5% 7.8% 1.3% 2.60% 2.70%
ROW + India 8.5% 10.2% 8.7% 9.5% 7.8% 8.0% 8.1% 9.0%

Segment Revenue
North America
Europe
ROW + India
Total Revenue

Segment Revenue CAGR% - 7 Years

North America
Europe
ROW + India
Mar-20 Mar-21 Mar-22 Mar-23 Mar-24
2020 - E 2021 - E 2022 - E 2023 - E 2024 - E
Persistent Systems
Revenue Driver - Price * Quantity Method
(All numbers in INR Million, Except per share data)
(Red for assumptions, Blue for Acutal data and Black for Calculations)
Date Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20
Year 2013 - A 2014 - A 2015 - A 2016 - A 2017 - A 2018 - A 2019 - E 2020 - E

Revenue From operations in USD Mn 238 274 309 352 429 471 483 532
Revenue from Operations in INR Mn 12,945 16,692 18,913 23,123 28,784 30,337 32,839 37,272

Average Exchange Rate (INR/USD) 3% 54.4 60.9 61.3 65.8 67.1 64.5 68.0 70.0

Reveune Mix
Services 82.8% 82.0% 80.9% 78.9% 72.0% 74.4%
IP Led 17.2% 18.0% 19.1% 21.1% 28.0% 25.6%

Revenue By Delivery Centers

Global development Centers 18.2% 20.9% 24.8% 28.0% 26.8% 32.0%
India 64.6% 61.1% 56.1% 50.9% 45.2% 42.4%
IP Led 17.2% 18.0% 19.1% 21.1% 28.0% 25.6%

Revenue (INR Mn)

Global development Centers
India
IP Led
Revenue From Operations
y/y growth %

Employee Details
Technical 6,540 7,349 7,861 8,618 8,808 8,329 8,816 9,330
Sales & BD 99 150 224 201 193 211
Others 331 358 421 445 459 436
Total 6,970 7,857 8,506 9,264 9,460 8,976 9,471 9,993
Team Addition 887 649 758 196 (484) 495 522
% Team Added 12.7% 8.3% 8.9% 2.1% -5.1% 5.5% 5.5%

Technical team Added 809 512 757 190 (479) 487 514
Technical as % Total Team Added 91.2% 78.9% 99.9% 96.9% 99.0% 98.4% 98.4%

Efforts and Utilisation Mix

Billable Person Months (no of person * 12) 55,541 62,091 64,248 65,553 68,760 71,206 72,096 76,298
GDC 3,718 4,585 5,754 7,682 8,515 10,609 9,835 10,408
India 51,823 57,506 58,493 57,871 60,245 60,597 62,261 65,890

Billed Person Months (no of person * 12) 41,176 44,033 46,094 48,950 52,626 56,406 56,145 59,417
GDC 3,294 3,980 5,113 6,623 7,280 9,255 8,494 8,989
India 37,882 40,053 40,981 42,327 45,346 47,151 47,655 50,432

Utlilisation %
Total 74.1% 70.9% 71.7% 74.7% 76.5% 79.2% 77.9% 77.9%
GDC 88.6% 86.8% 88.9% 86.2% 85.5% 87.2% 86.4% 86.4%
India 73.1% 69.7% 70.1% 73.1% 75.3% 77.8% 76.5% 76.5%

IP Led Person Months (no of person * 12 ) 8,974 9,148 10,207 13,509 19,978 19,982 20,573 21,772

% Billable Team Deployed at

GDC 6.7% 7.4% 9.0% 11.7% 12.4% 14.9% 13.6% 13.6%
India 93.3% 92.6% 91.0% 88.3% 87.6% 85.1% 86.4% 86.4%

Development Team
Billed Software Professionals
Billable Software Professionals 4,628 5,174 5,354 5,463 5,730 5,934 6,008 6,358
IP-Led Professionals 748 762 851 1,126 1,665 1,665 1,714 1,814
Trainees 1,164 1,412 1,656 2,030 1,413 730 1,094 1,157
As % Technical Team
Billed Software Professionals
Billable Software Professionals 70.8% 70.4% 68.1% 63.4% 65.1% 71.2% 68.1% 68.1%
IP-Led Professionals 11.4% 10.4% 10.8% 13.1% 18.9% 20.0% 19.4% 19.4%
Trainees 17.8% 19.2% 21.1% 23.5% 16.0% 8.8% 12.4% 12.4%

Linear Revenue / Billed Person Month (USD/PPM)

GDC 13,119 14,416 14,952 14,891 15,788 16,267 16,592 16,924
India 4,057 4,178 4,222 4,223 4,278 4,232 4,444 4,666
IP-Led 4,558 5,393 5,774 5,492 6,013 6,028 6,330 6,646

Number of Hours worked / Day 8 8 8 8 8 8 8 8

Number of Days worked / Month 20 20 20 20 20 20 20 20

Billing Rate USD/Hour

GDC 2% 81.99 90.10 93.45 93.07 98.68 101.67 103.70 105.78
India 5% 25.36 26.11 26.39 26.39 26.74 26.45 27.77 29.16
IP-Led 5% 28.49 33.70 36.09 34.33 37.58 37.68 39.56 41.54

Billing Rate INR/Hour

GDC
India
IP-Led

Linear Revenue / Billed Person Month (INR/PPM)

GDC
India
IP-Led

Other Income

Other Income 286 310 938 773 958 1,191 - -

Cash BOP + Current Investments 3,549 4,071 4,661 4,914 4,500 5,916 - -
Other Income Rate % 8.1% 7.6% 20.1% 15.7% 21.3% 20.1% 20.7% 20.7%
Mar-21 Mar-22 Mar-23 Mar-24
2021 - E 2022 - E 2023 - E 2024 - E

586 646 712 785

42,303 48,015 54,499 61,860

72.1 74.3 76.5 78.8

9,872 10,444 11,048 11,685

10,544 11,125 11,739 12,386

 551 581 613 647
5.5% 5.5% 5.5% 5.5%

542 572 604 637

98.4% 98.4% 98.4% 98.4%

80,732 85,410 90,346 95,555

11,013 11,651 12,324 13,035
69,719 73,759 78,022 82,520

62,870 66,514 70,358 74,414

9,511 10,063 10,644 11,258
53,363 56,455 59,718 63,161

77.9% 77.9% 77.9% 77.9%

86.4% 86.4% 86.4% 86.4%
76.5% 76.5% 76.5% 76.5%

23,038 24,373 25,781 27,267

13.6% 13.6% 13.6% 13.6%

86.4% 86.4% 86.4% 86.4%

6,728 7,118 7,529 7,963

1,920 2,031 2,148 2,272
1,225 1,296 1,370 1,449

68.1% 68.1% 68.1% 68.1%

19.4% 19.4% 19.4% 19.4%
 12.4% 12.4% 12.4% 12.4%

17,263 17,608 17,960 18,319

4,899 5,144 5,401 5,671
6,979 7,328 7,694 8,079

8 8 8 8
20 20 20 20

107.89 110.05 112.25 114.50

30.62 32.15 33.76 35.45
43.62 45.80 48.09 50.49

- - - -
- - - -
20.7% 20.7% 20.7% 20.7%
Persistent Systems
Cost Drivers
(All numbers in INR Million, Except per share data)
(Red for assumptions, Blue for Acutal data and Black for Calculations)
Date Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21
Year 2013 - A 2014 - A 2015 - A 2016 - A 2017 - A 2018 - A 2019 - E 2020 - E 2021 - E

Revenue from Operations 12,945 16,692 18,913 23,123 28,784 30,337 32,839 37,272 42,303

Employee Benefit expense 7,188 9,090 11,114 14,068 18,008 18,316 20,186 22,911 26,004
Cost of technical professionals 536 906 1,090 1,587 1,818 3,181 2,759 3,131 3,554
Other Expenses 2,094 2,553 2,806 3,554 4,304 4,153 4,703 5,338 6,058
Depreciation
Interest Expense
Tax Expense

Commonsize Analysis (As % of Revenue from Operations)

Employee Benefit expense 55.5% 54.5% 58.8% 60.8% 62.6% 60.4% 61.5% 61.5% 61.5%
Cost of technical professionals 4.1% 5.4% 5.8% 6.9% 6.3% 10.5% 8.4% 8.4% 8.4%
Other Expenses 16.2% 15.3% 14.8% 15.4% 15.0% 13.7% 14.3% 14.3% 14.3%
Depreciation
Interest Expense
Tax Expense

Effective Tax Rate (Tax Expense/PBT)

Dividends Paid
Dividend Tax

Dividend Payout Ratio

Dividend Tax as % of Dividend Paid
Mar-22 Mar-23 Mar-24
2022 - E 2023 - E 2024 - E

48,015 54,499 61,860

29,514 33,500 38,025

4,034 4,578 5,197
6,876 7,805 8,859

61.5% 61.5% 61.5%

8.4% 8.4% 8.4%
14.3% 14.3% 14.3%
Persistent Systems
Asset Schedule
(All numbers in INR Million, Except per share data)
(Red for assumptions, Blue for Acutal data and Black for Calculations)
Date Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22
Year 2013 - A 2014 - A 2015 - A 2016 - A 2017 - A 2018 - A 2019 - E 2020 - E 2021 - E 2022 - E

Property, Plant and Equipment

Other Intangible Assets
Total Fixed Assets

Depreciation & Amortisation

Depreciation & Amortisation Rate %

Purchase of Fixed Assets

Purchase of Fixed Assets as % Revenue from Operations
Mar-23 Mar-24
2023 - E 2024 - E
Persistent Systems
Valuation-DCF
(All numbers in INR Million, Except per share data)
(Red for assumptions, Blue for Acutal data and Black for Calculations)

Valuation Assumptions Data Sources

g (World Economic Growth) 5.0% Paper 99 , Goldman Sachs Publication 2003
Rf 8.0% 10 Year GOI Bond Yield
Rm 16.0% 10 Year CAGR% - NIFTY
Beta 0.75 in.reuters.com
CMP 650 in.reuters.com

Valuation Data
Total Debt (Long Term Borrowings) (2018)
Cash & Cash Equivalents (2018)
Number of Diluted Shares (2019)
Tax Rate (2019)
Interest Expense Rate (2019) 10%

MV of Equity
Total Debt
Total Capital

WACC
We
Wd
Ke
Kd
WACC

FCFF & Target Price

Explicit Forecast Period
2019 2020 2021 2022 2023
EBIT * (1-Tax Rate)
Dep
Purchase of Assets
Changes in Working Capital
FCFF

% Growth in Post Tax EBIT

As % Of Post Tax EBIT

Dep
Purchase of Assets
Changes in Working Capital

FCFF
Terminal Value
Total Cash Flow

Enterprise Value (EV)

Less: Debt
Add: Cash
Equity Value

Target Price
% Returns Rating
% Returns < 5% SELL
>5%, < 15% BUY
Rating >15% BUY

Sensitivity of Target Price to Terminal growth % and WACC

Terminal Growth %
4.0% 4.3% 4.5% 4.8%
13.0%
13.3%
13.5%
13.8%
WACC

14.0%
14.3%
14.5%
14.8%
15.0%
ublication 2003

Linear Decline Phase Terminal Yr

2024 2025 2026 2027 2028 2029 2030
Terminal Growth %
5.0% 5.3% 5.5% 5.8% 6.0%
Persistent Systems
Valuation-Relative
(All numbers in INR Million, Except per share data)
(Red for assumptions, Blue for Acutal data and Black for Calculations)

PEER DATA
Capitalization Revenue
Number of Equity Enterprise
Company Name Ticker Share Price Debt Cash TTM 1-Y FWD 2-Y FWD
Shares Value Value
Mar-18 Mar-19 Mar-20
MindTree MINT.NS 869 164 3,009 3,289 54,628 70,145 79,599
Hexaware HEXT.NS 353 297 - 1,033 46,478 54,208 61,116
Mphasis MBFL.NS 1,040 193 3,899 7,067 63,775 77,586 88,933
Cyient CYIE.NS 608 113 2,410 9,807 39,139 46,893 52,713

Maximum
75th Percentile
Median
25th Percentile
Minimum

Persistent Systems

Valuation Statistics
Enterprise Value / Revenue
Mar-18 Mar-19 Mar-20
MindTree
Hexaware
Mphasis
Cyient

Maximum
75th Percentile
Median
25th Percentile
Minimum
Persistent Systems
 EPS
TTM 1-Y FWD 2-Y FWD
Mar-18 Mar-19 Mar-20
34.00 45.75 51.38
19.00 21.70 24.72
43.00 56.41 63.85
36.00 39.45 47.69

P / E Multiple
Mar-18 Mar-19 Mar-20
Persistent Systems
Valuation-Summary
(All numbers in INR Million, Except per share data)
(Red for assumptions, Blue for Acutal data and Black for Calculations)

Multiple Implied Share Price

Min 25 %ile Median 75 %ile Max Parameter Min 25 %ile Median 75 %ile
Relative Valuation
EV / Revenue (TTM)
EV / Revenue (Fwd-1)
EV / Revenue (Fwd-2)
P / E (TTM)
P / E (Fwd-1)
P / E (Fwd-2)
DCF Valuation
DCF

Average Target Price

Price Data for Chart
Max Min 25 %ile Median 75 %ile Max
EV / Revenue (TTM)
EV / Revenue (Fwd-1)
EV / Revenue (Fwd-2)
P / E (TTM)
P / E (Fwd-1)
P / E (Fwd-2)
Relative Valuation
Target Price - DCF
DCF Valuation