Sameer Bendre to lead the New Chief of Operations Role,
Yogesh Patgaonkar joins as Chief People Officer.
Sameer Bendre, formerly Chief People Officer, will take on the role of Chief of Operations with
the responsibility for overseeing Persistent’s ESG and Risk Management priorities as well as
the company’s Enterprise Information Systems and Administration functions.
Yogesh Patgaonkar has joined Persistent Systems as Chief People Officer. In this role, he will
be responsible for Persistent’s Global HR function, including Learning & Development as well as
Talent Acquisition.
New to Persistent, Yogesh brings over 28 years of experience handling strategically critical
roles setting up and scaling the HR function to cater to global operations across leading
organizations like RPG Group, L&T, Mphasis. He joins Persistent after a consulting stint where
he set up a successful practice to work on executive coaching and strategic interventions for a
diverse set of organizations across industries. Yogesh will be a member of Persistent’s
executive team and will be based out of Pune, India.
Sandeep Kalra, Chief Executive Officer and Executive Director, Persistent Systems
“We are excited to welcome Yogesh to the Persistent family as we embark upon the next phase
in our talent transformation journey. As we continue to grow organically and through acquisitions
around the world, Yogesh’s diverse experience across HR, P&L and consulting will help in the
seamless integration and development of our global workforce. At the same time, ESG and Risk
Management are at the core of our strategy, and we look forward to Sameer’s leadership in
driving tangible business outcomes in these areas as well as other operational efficiencies.”
Disclosure : Not Invested.
Persistent again delivered industry leading growth on revenue and profitability, but it still has potential to grow.
- Already hit $1 Bn revenue runrate based on Q2 annualized, I was expecting it later in this year- TTM was $914Mn ( 766 for FY22 and 566 in Fy21).
- Revenue Up 40 % , PAT is up 36 %, some margin pressure is evident, but less than peers.
- Their EBIT has gone to 14.6 from 14.3 %, but PAT dipped to 10.7 % from 11.3 % one quarter ago ago.
Psys now shows the signs of the virtuous cycle of higher revenue> incoming leads>more conversions>more revenue/margins.
Worries:
1 Integration of the acquisitions, Persistent needs to ensure the business and employees of the acquired companies stay, often services acquisitions (unlike product where you get tangible IP and sticky Customer base) just get wasted as people leave.
2 They are highlighting the Stock price performance, and inclusion in Indexes, instead of focusing on the business performance.
3 Attrition is flat and remains a major concern, this quarter was 23.7%, FY22 avg was 26.6% . Persistent has niche skill needs, they will not find replacement easy.
4 IP led business (higher margin, more scalable) has been steadily declining in the last few quarters.
5 Higher exposure to High Tech vertical, which can get impacted badly in the coming months with US recession and revenue slowdown in tech sector which is becoming very visible.
Investor PPT: https://www.persistent.com/wp-content/uploads/2022/10/analyst-presentation-and-factsheet-q2fy23.pdf
Disc: Psys is still my biggest holding (despite being down 25 % from Peak), I have not sold any, valuations have moderated, I did add a little on valuation corrections recently.
Amazing results from Persistent - 3.3 % QTR growth and ACV is increasing with new business shows confidence of management is executing.
Quite expensive to add but will not trim and good divdend yield. Holding since 2019.
Disc: No buy or sell recommendation. Largest position in my portolio. you can find here
Team – After having gone through the Persistent Systems results and listening to the Earning Conf Call I am sharing my perspective on the results and the stocks price volume action today.
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Business Performance – I see no issues in the execution by the management and company. The results have been very much in line with what has been the recent trend and expectations. In fact, I see no sign of any gloom or doom in the management commentary in contrast to the Persistent’s larger peers.
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About Margins guidance going forward - The Management is indicating that the anticipated margin growth of 200-300 bps will take longer than expected. They maintain that the goal is to reach those goals in the next 2-3 years. They clearly anticipate pressure on margins and growth in the market due to macroeconomic and geo-political issues but would like to prioritise growth in FY 2024-25. Hence rather than take a hit on lower growth to maintain margins they are guiding that in FY25 they would like to prioritise growth.
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Larger transformative deals they are winning involve higher upfront transition costs and require hiring of people in proximate Onshore / customer locations. The margins from these wins will improve as resourcing mix moves to more of offshore (India-based) resources.
4.They continue to spend more and double down on Sales & Business Development, travel and hiring management & business leadership talent to scale growth. This may be impacting the margins currently but, in my opinion, this is spending for the right reasons.
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Stocks Price Volume action today – Persistent Systems has been no doubt an Expensive Performer compared to its peers. Many in the market who are impatient about growth and margins did not like the Management’s guidance on prioritising growth over margins in FY25, so that set of investors sold out today. Also given that the price went down by up to 10% during the day investors like me who follow automated trailing stop loss triggers got dragged along. Today was a day for a correction of markets expectations. Depending on how one sees their position in this stock - as a Investor / Trader, it is up to you to take a view and follow your systems in a disciplined manner.
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Right now, I do not find any reason for concern apart from street’s built up expectations of a clockwork like progress on margin improvement and sales growth to target $2 Bn likely getting delayed.
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Let us look for commentary from Analysts who track this stock closely for any other red flags or concerns before taking a view on next steps.
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Once again, the usual disclaimers apply – I am not a registered analyst or investment advisor. This is not investment advice. Do your own analysis and be responsible for it.
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All, I am trying to understand different IT companies and how they are different from each other. Does anyone know how persistent is different from TCS for example other than size and scale? Does all service companies do similR work?
