Persistent Systems posts marginal drop in March quarter profit at Rs 83.8 cr

Mid-size IT services player Persistent Systems on Wednesday reported a marginal decrease in March quarter net profit at Rs 83.8 crore despite an 11 per cent jump in revenue as investments for the future crimped profits.

The Pune-headquartered company had reported a post tax profit of Rs 84.4 crore for the year-ago period and Rs 87.9 crore for the preceding quarter. Its annual profit for FY20 decreased 3.2 per cent to Rs 340 crore.

For the reporting quarter, the revenue came at Rs 926.3 crore, while for FY20, it stood at Rs 3,565 crore.

The company's chief executive Chrisopher O'Connor, who took over during FY20, said the profit was down because of investments in building sales and marketing teams and transitions of people, and claimed that the expenses are over now.

However, the ongoing COVID-19 pandemic is a challenge which can slow down revenue growth because of issues on the demand side, he told PTI, adding that the company is confident of not being impacted too much.

Its entire staff of nearly 11,000 people has been working from home, and only a miniscule number of clients cannot be served now due to regulatory restrictions on working from home, he said.

The company's board and chief executive have already taken salary cuts and the same will be taken down to all the employees during the June quarter, but layoffs are not the priority to save costs, O'Connor said.

It has levers like salary cuts, promotion cuts, more lateral hires, upping utilisation, dip in travel expenses, marketing spends and spends on sub-contracting of work to up the profit margins during the new fiscal year, O'Connor said, without giving any guidance on revenue growth.

The company will depend more on lateral hiring and less on fresher hires, he said, clarifying that batches of young people will keep joining the company as before.

It has cash and equivalent of Rs 189 crore and is working on at least two deals of mergers and acquisitions at present, he said, adding that the transactions are aimed at expanding the revenue base and also capabilities in upcoming areas like data.

Having touched the USD 500 million annual revenue mark, the next target is doubling it to USD 1 billion, O'Connor said, without sharing a timeline for the same.

The company scrip was trading up 7.45 per cent at Rs 501 on BSE at 1135 hrs as against gains of 1.15 per cent on the benchmark.