Persistent Systems misses Q1 profit view on rising employee costs

India's Persistent Systems posted a lower-than-expected profit in its June quarter as the software services provider was hit by rising employee costs and other expenses.
 

The company said on Thursday profit rose 8.1% to 2.29 billion rupees ($27.93 million) in the three months ended June 30, while revenue from operations rose 23.6% to 23.21 billion rupees. Analysts were expecting a profit of 2.74 billion rupees, according to Refinitiv IBES.
 

KEY CONTEXT
 

June quarter earnings at Indian IT services companies have started off on a weak note, with companies flagging cuts in discretionary client spending and an uncertain demand environment. Persistent said order bookings for the quarter were at $380.3 million in total contract value, compared with $394 million a year ago.
 

PEER COMPARISON
 

Valuation (next Estimates (next Analysts' sentiment 12 months) 12 months) RIC PE EV/EBIT Revenue profit Mean Number Stock to price Div yield (%) DA growth growth rating of target** * analysts Persistent Systems 31.42 19.83 16.10 25.54 BUY 30 1.03 0.78 Tech Mahindra 19.35 12.91 5.45 10.82 HOLD 40 1.11 2.57 LTIMindtree 28.07 19.27 10.52 14.44 HOLD 35 0.98 1.20 Mphasis 22.89 14.89 3.82 6.52 HOLD 29 1.07 2.30
 

* Mean of analysts' ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell ** Ratio of the stock's last close to analysts' mean price target; a ratio above 1 means the stock is trading above the PT
 

APRIL-JUNE STOCK PERFORMANCE
 

-- All data from Refinitiv
 

-- $1 = 81.9914 Indian rupees
 

(Reporting by Navamya Ganesh Acharya in Bengaluru; Editing by Nivedita Bhattacharjee)