Mumbai The management of Persistent Systems Ltd has indicated that it is keen to reach $1 billion in annual organic revenue in 6-8 quarters from now, ICICI Securities Ltd said in a note.
Management said it expects the services business to continue the growth momentum and the Intellectual Property (IP) business to show modest growth in the short term, followed by a gradual decline over the long term.
The company invoked the following levers for margin expansion: a) they convert a large five-year contract from revenue sharing to a service contract due to lower than expected revenue for a particular product, which would increase margins to the level of the company That project includes b) pyramid rationalization, directed at 2,500 fresher hiring over the next one year, c) utilization improvements (directed to 83-84% stable range of usage d) price increases.
During the quarter, the company launched one of the most inclusive ESOPs (Employee Stock Ownership Plan) which is expected to comprise 80% of its global workforce. The company indicated that this would impact margins by 70-80 basis points in the short term, which would be largely offset over time.
Persistent Systems completed two acquisitions during the quarter – Software Corporation International (SCI) with expertise in the payment solutions domain, and Shree Partners, a digital transformation company.
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