We attended Persistent Systems Analyst Day with the focus of the event being showcasing new products like ‘Sentient’ for endpoint management, ‘Rovius’ for hybrid cloud frameworks and ‘Concert’ within IoT, besides sessions on ‘Blockchain’ and ‘Machine Learning’. The meet though did not provide any incremental insights into the company’s core growth engines of digital platforms and IBM CE/CLM/ IoT. We reiterate our BUY rating on Persistent Systems given Strong pipeline and execution in the digital segment, creation of alternate sales channel for the IBM IoT product through the reseller agreement which should help sales momentum along with revenue contribution from the services wrapper built on top of the IoT platform, and headroom to improve margins on higher onsite utilisation and scale-up in pre-built solutions. According to the company, it has been difficult working with IBMs sales channel to drive appropriate focus on Persistent’s CE/CLM/IoT platform.
That is one of the key reasons why the company entered a re-seller agreement with IBM and is taking the platform directly to customers. However, any progress on this front would only be gradual in our opinion. The services opportunity around creating vertical specific applications on top of the platform should be an incremental contributor to growth. Salesforce (CRM) partnership for the healthcare vertical and Appian and Blue Prism for BFSI are expected to continue to be the key drivers of growth in the medium term. PARX acquisition enhances the company’s Salesforce (CRM) positioning in the DACH region with the acquisition also bringing some unique solutions selling capabilities along with it. Partnerships with USAA for banking and Partners Healthcare for the provider segment should also help growth in the segment.