23 Mar , 2022 By : Kanchan Joshi
Persistent Systems has made deep investments in the past 18 months, to build a robust cloud partner ecosystem with key cloud providers globally. Via a series of acquisitions worth $220 million, Persistent Systems has one of the most potent cloud capabilities now among mid-cap peers that would ensure that its go-to market strategy revolving around cloud & product engineering is aligned with its customers’ transformation journey.
Analysts at brokerage and research house IIFL have maintained Buy rating on the multibagger stock and it remains their top midcap stock pick with a 12-month target price of Rs5,020 apiece. Though, aggressive M&A, supply-side pressures could act as key risks.
"Cloud has become the building block for digital transformation. The rising complexity of a hybrid multi-cloud environment is increasing the scope of work for IT services companies, which are able to build capabilities around it, and Covid has acted as a catalyst," the note stated.
Cloud services are expected to reach around $500 bn by 2022, as per Gartner, growing at 20% year-on-year (YoY). Hyperscalers like Amazon AWS, Microsoft Azure and Google Cloud continue to see super-normal growth in cloud revenues over the medium term, the brokerage highlighted.
“Persistent Systems’ revenues from each cloud provider are comparable with that of much larger companies, boosted by recent acquisitions, which are: Salesforce ($120-130 m, acquired Capiot), Microsoft Azure ($100 m, acquired data Glove), Google Cloud ($ 25 m , acquired MediaAgility), IBM Cloud ($ 100 m , acquired Fusion360) and Amazon AWS (organic)," the brokerage note sta.
The strength of its partner ecosystem is reflected in the number of certified professionals, and the competencies and specialisation across the cloud ecosystem, where PSYS ranks higher than same-size peers, IIFL added.
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