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Sunday, January 26, 2014

Persistent - a small story

Hi,

I have often been asked this question, as recently as last week. How to identify winning stock? I delivered one presentation (uploaded on my LinkedIn) on this subject of how to identify a winning stock. 

I would like to today sight a real example where we identified a stock, Persistent, that has delivered another stellar performance. Persistent was identified at a price close to Rs. 300 about 2 years ago. Now at 1000 + dividends. 

Frankly speaking, I have not done a very detailed financial analysis about Persistent (forget about financial modeling). A quick glance at numbers was sufficient, my presentation "how to identify winning stocks" was handy. So that allowed me to spend time somewhere else.

Phil Fisher said that if you want a detailed and accurate picture of 5 companies then go to five of them/their vendors, ask each of them intelligent questions about the points of strength and weakness of the other four, and nine times out of ten a surprisingly detailed and accurate picture of all five will emerge.

I went to five of my friends, relatives (little bit inputs from my side too) who understand technology industry, technology environment of/ challenges/ opportunities available to Persistent. Since Persistent operates from Pune some of them could give me inputs about the quality of its management. One of them worked, from Persistent's client side, on a highly acclaimed product that was delivered by Persistent to its client. These inputs were very very critical. This is how a decision was made to invest in Persistent. So really speaking, it was not a rocket science to identify Persistent. Why to waste time in building a rocket/model? Sometime a rocket/model may be required but most of the time NOT.

Disclosure: I am holding this stock.
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Persistent Systems delivers another strong quarter

Persistent Systems reported another strong quarter, with 2.2% quarter-on-quarter growth in dollar revenue and 5.6% rise in profit after tax.

The company, which provides software product related services, is one of the few that has lived up to Street expectations, especially in the mid-cap IT space.

“We have delivered another strong quarter with 3.8% Q-o-Q growth in services and improved operational efficiencies. Our continued investment in technology has helped us establish leadership position in the Social, Mobile, Analytics, Cloud space,” said Dr. Anand Deshpande, Chairman, Managing Director and CEO, Persistent Systems.

“We continue to focus on products and IP-led revenue, tracking new industry trends, and encouraging innovative ideas that solve real-world problems.”

Persistent Systems reported a revenue of 69.94 Million, representing a Y-o-Y growth of 15.1%. In rupee terms, revenue was 4,327.57 mln, up 30.0% year on year. Quarter on quarter growth was only 0.1% due to the appreciation in the value of the rupee.

EBIDTA was Rs 1,197.25 million, up 45.3% year on year and 6.7% on quarter.

Profit before Tax (PBT) was INR 865.27 million, up 21.9% year on year.

Profit after Tax (PAT) came in at INR 641.98 Million, representing a Y-o-Y growth of 29.7% and Q-o-Q growth of 5.6%.
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3 comments:

Tyler Jackson said...


identify winning stocks" was handy. So that allowed me to spend time somewhere else


Stock Market

Niteen S Dharmawat said...

Interesting interview of Persistent Systems’ Founder and Chairman Anand Deshpande.

http://www.thehindubusinessline.com/features/smartbuy/we-dont-really-see-a-slowdown-in-the-it-market/article5764658.ece?ref=wl_companies

Persistent was amongst the first few companies that identified the potential of Social Media, Mobile, Analytics and Cloud about 5 years ago.

Overall interview is interesting; however, one thing that fascinated me the most is his comment on ‘Internet of Thing’ (IoT). I got an opportunity to attend one presentation on IoT and its applications few months ago. I agree that this could be another game changer in the next few years.

If you have more info on IoT opportunity, competitors, skills requirements, any ideas about Persistent's IPR in this space, differentiators, please feel free to share even if you believe it is small info. It will be of help.

To know more about IoT use following links:

http://www.itu.int/en/ITU-T/Workshops-and-Seminars/iot/201402/Documents/Open_Protocols_and_Internet_of_Things_OASIS_rev_ppt.ppt
http://webcache.googleusercontent.com/search?q=cache:nhuhwd3T6FIJ:rdiego.diatel.upm.es/r%2526d/iot/Introduction_to_IoT.ppt+&cd=2&hl=en&ct=clnk&gl=in&client=firefox-a
http://www.mckinsey.com/insights/high_tech_telecoms_internet/the_internet_of_things
http://en.wikipedia.org/wiki/Internet_of_Things
http://personal.ee.surrey.ac.uk/Personal/P.Barnaghi/teaching/EEEM048/EEEM048_Lecture1_Introduction_Part_1.ppt

Disc: Holding the stock.

Niteen S Dharmawat said...

Another excellent Qtr and yearly results by Persistent. Esp. impressed with the growth in IP led revenue which makes Persistent different from other Software companies. Also declared Rs4 final dividend that takes the total dividend for the year to Rs12.

http://www.persistent.com/sites/default/files/Analyst%20Presentation%20and%20Fact%20Sheet%20-%20Q4%20FY14.pdf

Identified it around 300 about 2.5 years ago, now close to 1100 + dividend.

Disc.: I will continue to hold the stock. May consider taking additional exposure.

Cheers,
Niteen S Dharmawat