Prabhudas lilladher attended Analysts’
Meet of Persistent Systems. The management highlighted evolution of
technology towards social, cloud, mobility and collaboration as an
advantage for their growth. Moreover, its IP strategy has fuelled the
growth along with industry leading margin. The management has shown keen
focus on execution after making few key hires over last one year.
Downgrade to “Accumulate” due to valuation concern.
- IP strategy – Organic and Inorganic growth: Persistent
continues to spend 5% of efforts in developing its own IP.
Moreover, Persistent continues to look out for end of life cycle product
to build its IP portfolio (Openwave LBS, IBM TNMP). According to the
management, the software companies are keen to sell some of these assets
in order to free their assets for future growth. The IP acquisitions
are profitable from the day of acquisition. Persistent builds solution
and services around the IP to deliver services to its enterprise
customers.
- Social, cloud, mobility and collaboration – Sweet spot for growth:
According to recent Gartner (June-12) report, Social, Cloud, Mobility
and Collaboration have taken centre stage of enterprise decision making.
According to the management, the main stage deployment of these trends
will start from H2CY13. The competencies developed by Persistent over
the years will help them exploiting the growth opportunities in these
arena
- Decision making shift from CIO to LoBs:
According to the management, the decision making is shifting to Line of
Businesses (LoBs) from CIOs (Chief Information Officer). LoBs head take
quick decisions and the budgets are fragmented. The shift is turning
the tide in favour of Persistent.
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