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Q3 Results: Persistent Systems To Rely On Offshoring To Maintain Margin

Net profit of Persistent Systems rose 4.1 percent in the December-ended quarter to Rs 91.7 crore.

Agents attend to customer calls at a call center in New Delhi, India (Photographer: Sondeep Shankar/Bloomberg News)
Agents attend to customer calls at a call center in New Delhi, India (Photographer: Sondeep Shankar/Bloomberg News)

Persistent Systems Ltd. seeks to manage its operating margin at current levels by “doing more” of relocating its projects to India and utilising its local employees.

“We are trying with customers to do more of offshoring and also extended it to some of our digital projects started around two years back,” said Sunil Sapre, its chief executive officer in an interview with BloombergQuint. “We’ve had a good bench for the previous two quarters on the digital side that helps us to improve the strike rate in terms of new wins and also helps on the margins front.” Bench is a term used in information technology parlance to describe employees not assigned to any ongoing billable project.

Key Highlights (QoQ)

  • Revenue rose 3.5 percent at Rs 864 crore.
  • EBIT gained 2.9 percent at Rs 106 crore.
  • EBIT margins flat at 12.3 percent.
  • Net profit rose 4.1 percent at Rs 91.7 crore.

The company’s board approved buyback of up to 30 lakh shares or 3.75 percent equity at Rs 750 per share aggregating to Rs 225 crore, according to an exchange filing. The buyback is at 33 percent premium to the previous close.

Shares of the IT company rose as much as 5.3 percent, the most in nearly three weeks, to Rs 595 per share. On the other hand, NSE Nifty IT Index declined as much as 0.8 percent in today’s trade.

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