The management seems very confident of growth. Are they just putting up a brave face or there is a truth in not having much impact on the company’s growth?
Bought today as was in my buying zone, growth should largely be intact and stock should hopefully bounce back after Q4 results and management’s guidance
Result seems to be good. Management also maintained the FY27 guidance of $2 billion USD revenue.
Will there be impact on the business of the Persistent Systems due to the recent adavancements made by Anthropic agents? Does the enterprises will rely on such agents in future instead of outsourcing their digital transformation?
From AI Czar David Sacks himself:
"You take a product like Salesforce that deals with all your customer contracts and revenue. You are not going to replace that with code that has been spit out of a coding assistant that has not been fully vetted.
Think about how many bug reports on Salesforce’s code base over the last 25 years. Maybe millions of them. That system has been tested across thousands of large customers and enterprises
The idea that you are just going to rip out that system and replace with code that has been probabilistically generated by an AI engine yesterday, with a small team to maintain it internally, just does not seem realistic to me"
Any opinions on the acquisition? I think it’s a good move, especially considering the revenue, profits, and potential for Opex optimization within Nagarro
Market appears to be more worried about the valuation premium being offered and the poor margin profile and subdued growth rate of the said entity. But the opportunities look far more interesting. First, the acquisition would de-risk the company on geographical diversification front, as it derives 80% of the total business from US alone right now; which after the acquisition would go down a lot. As a result, it would help the company to increase its presence in the European and Middle Eastern markets. From the looks of it, the businesses of both the companies are complementary, and it may help Persistent to gain more market share in industrial/manufacturing sectors.
Also, the management is delighted about the cultural fit rather than just the numbers (reference). These things are more important, IMO when the acquired entity is of 3/4th of your own size.
Two interesting excerpts from the yesterday’s Finshots article.
- Regarding valuation of Nagarro
- Regarding the contrast in the working culture of both the entities
Nice share on the valuation part..
On the same lines, Euro 81 is the price Nagarro closed on 16th Dec’ 20 post spin off from Allegeier
But culture i feel should be the real concern. Growth mindset seems missing from Nagarro. Manas Human (CEO Nagarro) recenlty in an interaction with CNBC admitted - “We don’t have growth targets internally. It’s a very different kind of culture.” Sandeep Kalra (CEO Persistent) has defended saying that Nagarro management was distracted for a the last 3 years.. and the number one goal for him is to ensure that the combined entity continues to grow at a rate closer to Persistent’s, margin improvements can happen later..