Persistent Systems Ltd: Strong Operating Performance, Despite Top-Client Weakness

BUY

CMP: Rs3707  |  Target Price: Rs3950

PSYS reported better-than-expected operating performance in Q2. Revenue growth was broad-based across Software, Hi-tech & Emerging industries (8.3% QoQ; ex-top client 18.3%), BFSI (3.0%), and Healthcare & Life Sciences (4.7%). Management highlighted that client-focus has shifted towards cost optimization projects, given the prevailing uncertain macro conditions; this augurs well for large-deal opportunities. The company has not seen any material delay in decision-making so far, but remains watchful of the next quarter, given it being a short quarter. Order booking remained strong, with TCV of USD368mn (1.4x book-to-bill). The Services business has posted a 9.5% CQGR in the last eight quarters, and Management remains confident about sustaining the growth momentum on the back of continued strong demand, robust deal intake, healthy deal pipeline, new logo additions, and steady progress in client mining. IP revenue grew strongly in Q2 and partly explains the margin beat. We raise our EPS by 3.9%-5.1% for FY23E-25E, factoring-in the Q2 beat. We retain BUY with TP of Rs3,950 at 25x Sep-24E EPS (earlier Rs3,800), considering the strong execution, favorable industry tailwinds, and strong earnings trajectory (24.4% EPS CAGR over FY22-25E).

Result summary: Revenue grew 5.8% QoQ to USD255.6mn (CC 6.6%; organic 4.8%), above our expectations of USD251.9mn, driven by consistent growth in the Services business and strong rebound in IP revenue. Services revenue grew by 4.9% QoQ, aided by 4.4% growth in volume and 0.5% growth in blended realization. IP-led revenue sharply rebounded, growing 17.9% QoQ due to uptick in Accelerite revenue. EBITM expanded by 30bps sequentially, on account of operational efficiencies (+100bps), currency movement (+90bps), uptick in IP-led revenue (+80bps), and lower visa costs (+50bps), which were somewhat offset by wage hikes (-230bps), increase in doubtful debts provisions, higher amortisation charges and other expenses (-60bps). Net profit stood at Rs2.2bn, above our estimate, due to better operating performance. Revenue growth was led by Software, Hi-tech & Emerging industries (8.3% QoQ), Healthcare & Lifesciences (4.7% QoQ) and BFSI (3% QoQ). The top-client declined 21.3% QoQ. PSYS has seen steady improvement across client buckets. Order booking was at USD368mn (1.4x book-to-bill) in TCV, including USD228.3mn of new business TCV. Management is confident of expanding EBITM in FY23 compared with FY22, considering the H1 performance and benefits accruing from better utilisation, revenue growth-led operating leverage, optimization in subcontracting costs, flattening employee pyramid, and favorable currency. What we liked: Broad-based revenue growth momentum in Services; strong rebound in IP revenue; EBITM beat, despite salary hikes; and moderation in attrition (23.7% vs 24.8% QoQ); What we did not like: Weakness in the top client.

Earnings-call KTAs: 1) The integration of recent acquisitions is on track and smooth; Management expects cross-selling and upselling to play out in coming quarters. 2) Demand environment remains healthy, but seeing increased focus on cost optimization programs. 3) Management expects the usual furloughs in Q3 as of now, although better clarity will emerge by early-December. 4) The company has not witnessed any material delay in decision-making so far, but remains watchful of the evolving macro situation in Q3, particularly given it being a short quarter. 5) LTM attrition for the quarter stood at 23.7% vs 24.8% in Q1; Management expects it to further moderate in H2. 6) Offshore realization rates steadily increased over the last 3 quarters, driven by better execution on fixed-price projects and enforcement of COLA clauses. 7) The company has hedges of USD195mn as of end-Q2, at an average exchange rate of Rs79.95/USD.

Happiest Minds Delivers Growth of 34.4% Reporting Revenues of Rs 356 Cr And EBITDA At 26.3%

* Net Profit at Rs 59 Crores grows 33.7% Y-o-Y and 5.4% Q-o-Q

Happiest Minds Technologies Limited (NSE:HAPPSTMNDS), a ‘Born Digital. Born Agile’, digital transformation and IT solutions company, today announced its consolidated results for the second quarter ended September 30, 2022 as approved by its Board of Directors.

Financial highlights

Quarter ended September 30, 2022

·         Operating Revenues in US$ stood at $44.3 million (growth of 5.0 % q-o-q: 23.8% y-o-y)

·         Total Income of Rs 35,933 lakhs (growth of 8.9% q-o-q; 31.1% y-o-y)

·         EBITDA of Rs 9,434 lakhs, 26.3% of Total Income (growth of 7.5% q-o-q; 34.1% y-o-y)

·         PAT of Rs 5,941 lakhs (growth of 5.4% q-o-q; 33.7% y-o-y)

·         Free cash flows of Rs 8,580 lacs

·         EPS (diluted) for the quarter of Rs 4.09 (growth of 5.4% q-o-q; 33.7% y-o-y)

Half year ended September 30, 2022

·         Operating Revenues in US$ stood at $86.6 million (growth of 25.5% y-o-y)

·         Total Income of Rs 68,929 lakhs (growth of 30.5% y-o-y)

·         EBITDA of Rs 18,209 lakhs, 26.5% of Total Income (growth of 33.6% y-o-y)

·         PAT of Rs 11,575 lakhs (growth of 44.4% y-o-y)

·         Free cash flows of Rs 17,219 lacs

·         EPS (diluted) for half year of Rs 7.99 (growth of 44.2% y-o-y)

Ashok Soota, Executive Chairman, “We have yet again delivered on our promise of delivering industry leading growth with profitability.  Our results reflect the 360-degree value we create for our customers with our breadth and depth of offerings”.

Venkatraman N, MD & CFO, “I am extremely happy with our financial performance and I believe its testimony to the good work we doing for our customers. This will be 10th quarter in succession where we have delivered EBITDA margins of more than 25%.  Separately, being awarded the prestigious Golden Peacock Award for Excellence in Corporate Governance makes me very proud as it’s a validation of our efforts to build an institution on a strong, ethical and moral foundation”.

Joseph Anantharaju, Executive Vice Chairman, “The results reflect the relevance of our digital offerings to our clients and our ability to navigate an uncertain environment based on our value proposition of revenue enhancement and resilience. We ensure that our customers remain committed to their digital strategy and sustain their investment across various initiatives. This provides opportunities to continue expanding our presence and add value to these initiatives.”

Clients:

·         226 as of September 30, 2022

·         16 additions in the quarter

Our People - Happiest Minds:

·         4,581 Happiest Minds as of September 30, 2022 (net addition for the quarter 393)

·         Trailing 12 months attrition of 23.5%

·         Utilization of 80.6%, from 79.1% in last quarter

Q2 FY23 Key Project Wins:

·         For a global energy company, Happiest Minds was chosen to provide digital transformation services across its multiple lines of businesses

·         For a Fortune 100 pharmaceutical corporation, Happiest Minds is working with its IT organization on cloud and data projects

·         For a US-based food retailer, Happiest Minds is helping them in launching their e-commerce initiatives

·         For a leading US energy company, Happiest Minds was chosen to build a platform for their last mile delivery services

·         For a global communications company, Happiest Minds was chosen to design and implement one of their analytics products

·         For a European digital housing marketplace, Happiest Minds is enhancing and maintaining its digital platform

·         For an ANZ-based leading fashion clothing and accessory brand, Happiest Minds is building its new data platform and also implementing cybersecurity solutions

·         For the Asia Pacific subsidiary of a beverages major, Happiest Minds is automating two of its key business processes using the Microsoft Power Platform

Recognitions and CSR :

·         Happiest Minds wins the prestigious ‘Golden Peacock Award for excellence in Corporate Governance 2022’

·         Happiest Minds is recognized among ‘Top 50 Best Workplaces for WomenTM 2022’ by Great Place To Work® Institute

·         Happiest Minds is ranked #68 among ‘Best Workplaces in AsiaTM 2022’ by Great Place To Work® Institute

·         Happiest Minds achieves Select Tier Partner Status with Snowflake

·         A molecular testing laboratory was inaugurated at Jayadeva Institute of Cardiovascular Sciences and Research in Bengaluru as part of Happiest Minds contribution of rupees one crore to establish a testing lab and 3 ICU Ventilator Beds

·         On World Ozone Day 16th September, Happiest Minds Commissioned 183kWp Solar Power Plant at its corporate headquarters in Bengaluru in-line with its vision to achieve carbon neutrality in its operations by 2030

Expansion

·         Happiest Minds expands into the east Indian city of Bhubaneshwar in Odisha, operations to begin by December 2022. Project plan including request for allotment of land to build campus has been favorably heard by the Government of Odisha.

·         Happiest Minds Strengthens its Bengaluru presence with purchase of office space of 2.4 Lakhs square feet in Electronics City and expands its capacity in its existing development center at Noida

Analyst Mentions

·         Happiest Minds is a ‘Major Contender’ in Everest Industry 4.0 PEAK Matrix® 2022

·         Happiest Minds is an ‘Aspirant’ in Everest IT Security Services PEAK Matrix® 2022 – North America

Announcements:

·         The Board of Directors of the Company at their meeting held on October 20, 2022 has declared an interim dividend of ? 2 per equity share of face value ? 2/- for the financial year 2022-23. Record date for the purpose of interim dividend has been fixed on November 3, 2022 and the dividend will be paid on and after November 15, 2022

Piramal Pharma Introduces Nixit, Its Smoking Cessation Brand With A New campaign #QuititwithNixit In Karnataka

·         Makes an entry in the smoking cessation category with nicotine lozenges format

·         Nixit aims at helping people quit smoking in 3 months by controlling their withdrawal symptoms

Piramal Pharma Limited’s Consumer Products Division (CPD) introduced Nixit, its smoking cessation brand in the Nicotine Lozenges format. The brand unveiled its high decibel TV, Digital and Print campaign, #QuititwithNixit in Karnataka to help consumers overcome smoking through Nicotine Replacement Therapy by controlling their withdrawal symptoms.

The campaign is premised on telling smokers that Nixit will help them combat their withdrawal symptoms and ease their quitting journey. Nixit lozenges releases nicotine in a controlled manner without the need to chew, helping consumers to quit smoking in 3 months. It comes in a refreshing frost mint flavour with 2mg and 4mg strengths.

Nitish Bajaj, CEO, Piramal Consumer Products Division said, “Smokers in the age group of 25-44 are in the phase of life with increasing responsibilities and tend to have more reasons and triggers to quit. Nixit helps relieve smokers with withdrawal symptoms. Through this campaign, we wish to reach out to smokers who want to quit and make the journey easier for them. With Nixit Lozenges, we are aiming to help consumers achieve a healthier lifestyle.”

Nixit was acquired by Piramal Pharma Ltd. from Strides Pharma Science Ltd. in 2022 and was first launched in FY2018. It is a smoking cessation brand that helps consumers overcome smoking through Nicotine Replacement Therapy. Prior to the acquisition, Nixit was available on e-commerce and in chemist stores across India.

Link to the campaign: https://www.youtube.com/watch?v=ftjreLhQsNA&ab_channel=NixitIndia

Tata Hitachi Announces Orange Utsav Across The Indian Market

he festive season is in full swing in India, and the country is all geared up to celebrate post the long hiatus caused by Covid. To sweeten the deal for the Customers during this festival season, Tata Hitachi has announced a nationwide 3-day event called ‘ORANGE UTSAV’. ORANGE resonates with Tata Hitachi’s brand color, which is unique in the industry and UTSAV resonates with the festive period. This event will be held on the 18th, 19th, and 20th of October at all of Tata Hitachi’s Dealerships to promote the products and after-sales support offerings to the customers. The event will host an exhibition where Tata Hitachi machines, parts, and attachments will be on display. The Orange Utsav will also usher in prosperity to customers with assured gold with every purchase of a machine or an attachment. The scheme benefit value will differ as per the order value.

Mr. BKR Prasad, Head – Marketing & Product Development said “Tata Hitachi has launched the ‘Orange Utsav’ nationwide for the first time. This marketing initiative aims to prep the customers for what’s ahead during this festive season. This is a major buying season and Tata Hitachi is ready with the ‘Orange Utsav’ which will make buying more joyful for the customers. We hope this will be a rewarding experience for both our customers and us.”

Capital Market Day 2022: Vitesco Technologies Presents Its Expected Business Development For Electrification

Projected organic growth in electrification sales: to a total of €5 billion in 2026, to a total of €10 to €12 billion by 2030 

E-mobility: orders worth approximately €10 billion received within one year (HY2/2021 and HY1/2022) 

      New order intake: major order for thermal management worth more than €1 billion received 

      Expectation for 2030: electric vehicles will account for more than 70 percent of passenger car production 

Vitesco Technologies, a leading international developer and manufacturer of state-of-the-art powertrain technologies for sustainable mobility, presented its current strategy and projected business performance through 2030 to prospective investors and analysts at today’s Capital Market Day 2022. The company has been listed on the Frankfurt Stock Exchange since September 2021. 

By 2030, electric vehicles will make up more than 70 percent of global passenger car production, with battery-electric vehicles (BEVs) accounting for the lion’s share.[1] “In the years to come, we will see an ever-growing range of electric vehicles,” says CEO Andreas Wolf. “The majority will have Vitesco Technologies components on board: e-axles, battery management systems, inverters and numerous other products”.

In the last two six-month periods alone, Vitesco Technologies recorded orders worth around €10 billion in electrification business. And it goes on: Vitesco Technologies recently booked a large order in the field of thermal management system from a global customer with a total volume of more than €1 billion. The thermal management system is used to regulate the optimum temperature range for high-voltage components in battery electric vehicles. 

Company targeting strong e-mobility market 

Vitesco Technologies revealed its expectations for 2026 at the Capital Market Day. The company expects to see its electrification business generate sales of around €5 billion in four years – set to rise to between €10 and €12 billion by 2030. “We are talking about strong organic growth in electrification, meaning an annual average increase of 40 percent up to 2026,” says CFO Werner Volz. Vitesco Technologies is also expecting the Group’s adjusted EBIT margin to range between 7 and 9 percent in 2026 and free cash flow to reach more than €400 million. 

“We aim to achieve these financial targets in the medium term with a double-digit EBIT margin in the future 'Powertrain Solutions' business area and increased profitability in the future 'Electrification Solutions' business area,” continued Volz. The electrification business is expected to break even in 2024. It is planned to make an initial dividend payment for the 2023 fiscal year. 

Suppliers will remain key for electrical components 

Experts believe battery-electric vehicles will continue to depend on parts from suppliers, particularly in powertrain technology, with fewer but higher quality components being supplied. Battery management systems and inverters, in particular, will be provided much more frequently from suppliers such as Vitesco Technologies in the coming years. According to company estimates, it is anticipated that the share of production contributed by suppliers for battery management systems will grow by around 10 percentage points to roughly 65 percent in 2030, with the share for inverters rising from 50 percent to roughly 70 percent in that time. For electric motors, the expectation is that even in 2030, around 40 percent will continue to be manufactured by suppliers. 

The road to sustainability with strategic partnerships 

With the help of strategic partnerships, Vitesco Technologies aims to bring even more efficient e-mobility solutions to market while also improving its access to raw materials. In terms of suppliers, Vitesco Technologies has enlisted a new partner, Infineon, in May to complement its existing collaboration with ROHM Semiconductor. This partnership gives Vitesco Technologies access to more than 50 percent of the global capacity for silicon carbide wafers, which are essential for the production of semiconductors. In terms of customers, Vitesco Technologies has gained a close strategic partner in the shape of its long-standing key account, Renault Group, in July. Going forward, the two companies will jointly develop highly integrated and compact power electronics.  

Vitesco Technologies is not just dedicated to finding solutions for emission-free mobility. Achieving the highest standards of sustainability lies at the core of its mission. Vitesco Technologies has set itself ambitious targets, aiming for its production to be fully carbon neutral by 2030 followed by its entire value chain by no later than 2040. The company also helps its customers to achieve their own sustainability goals using electrification solutions from Vitesco Technologies. “Regardless of the decision at hand, we always ask ourselves what the next generation would say,” explains Wolf. 

Manipal Academy of Higher Education Researchers Are Among The Top 2 Percentile Rank of Scientists Worldwide: Stanford University

Manipal Academy of Higher Education is proud to announce the most recent achievement of its researchers being recognized in the top 2 percentile rank of scientists worldwide. In a recent study by researcher from Stanford University, Prof. John P. A. Lonannidis listed a total of thirteen researchers from the Manipal Academy of Higher Education based on their publications indexed in Scopus.

The scientists who have been recognised in the top 2 percentile are, Dr Bhaskaran Unnikrishnan and Dr. Prasanna  Mithra from Kasturba Medical College, Mangalore, Dr Chiranjay Mukhopadhyay from Kasturba Medical College, Manipal, Dr Shashidhar Acharya from Manipal College of Dental Sciences, Manipal, Dr.Sharma Chandra P. and Dr. Srinivas Mutalik from Manipal College of Pharmaceutical Sciences, Dr Raja Selvaraj, Dr Raghavendra U,  Dr Tanweer Ali and Dr Shiva Kumar from Manipal Institute of Technology, as well as Dr. Deepak Mathur Adjunct Professor of Manipal Acadmey of Higher Education.

Further to this achievement, Lt. Gen. (Dr.) M. D. Venkatesh, Vice-Chancellor, Manipal Academy of Higher Education, said, “Being recognised in the top 2 percentile rank of scientists worldwide is an extraordinary achievement indeed. Our heartiest congratulations to all the researchers who have been featured in this list. We at MAHE have always strived to create a vibrant atmosphere for research and developmental activities and nurtured interdisciplinary research culture”.

The exhaustive list includes the top 2 percentile scientists of the world from different fields on the basis of standardized citation indicators like number of citations, H -Index, co-authorship and a composite indicators. This version (4) is based on the Sept 1, 2022 snapshot from Scopus, updated to end of citation year 2021. Career-long data are updated to end-of-2021 and single recent year data pertain to citations received during calendar year 2021. The complete details of these researchers can be obtained from the following link https://elsevier.digitalcommonsdata.com/datasets/btchxktzyw/4

Great Learning Launches The Third Edition of The Diwali Campaign Called #NewBeginning

Great Learning, one of the leading global edtech companies for higher education and professional training today announced the launch of the 3rd edition of its flagship Diwali campaign #NewBeginning. Through this campaign, the company aims to offer free career counseling to fresh graduates and working professionals through one-on-one sessions with leading domain experts. These sessions will provide insights to the mentees on the latest trends in the industry, a suggested career roadmap and ways to address their career roadblocks.

The job market in India is in the doldrums and there's an imminent recession across the globe. Navigating one's career path through such a scenario can be daunting, especially for inexperienced working professionals.

The #NewBeginning campaign by Great Learning aims to provide the right platform to help such individuals make better and more informed career decisions. People can register themselves through this link https://program.greatlearning.in/newbeginning_2022/  for a counseling session between 19th-24th October. 30+ renowned domain experts will provide counseling for careers in the fields of Software Engineering, Data Science, Product Management, Digital Marketing, Artificial Intelligence, Machine Learning, Cloud computing, Cybersecurity and Management. These mentors working at renowned companies have an average 12 years of experience and will offer 300+ counseling sessions as a part of this campaign.  

Speaking about the initiative Aparna Mahesh, Chief Marketing Officer, Great Learning said “ Getting good guidance early on in one's career can be invaluable. Fresh graduates and young professionals face a lot of ambiguity while choosing a career path that's right for them. A lot of professionals also get stuck in jobs that don't fit their skills and interests. Our goal with these 1:1 free counseling sessions is to celebrate the spirit of Diwali and enable people to make a #NewBeginning in their careers with guidance from top domain experts in the country.”

Lauding this unique initiative, Sonu Kansal, a counseling session mentee from the previous edition of the campaign, said “After completing my Bachelor's in Technology in Mechanical Engineering, I worked as an Operations Analyst for 3 years. I registered for the counseling session to understand how to transition from an operations role to a product management role. Getting an opportunity to speak with an expert provided clarity to me on what my next steps should be. I really appreciate that the team at Great Learning came up with such an initiative to address the queries of individuals like me.”

Till date, Great Learning has helped 420+ individuals in navigating their career paths during the pandemic through the previous editions of the campaign.

About Great Learning

Great Learning is a part of BYJU'S group and a leading global ed-tech company for professional training and higher education. It offers comprehensive, industry-relevant, hands-on learning programs across various business, technology and interdisciplinary domains driving the digital economy. These programs are developed and offered in collaboration with the world's foremost academic institutions like Stanford Graduate School of Business, MIT Professional Education, The University of Texas at Austin, National University of Singapore, The University of Arizona, Deakin University, IIT Madras, IIT Bombay, IIT Roorkee, IIIT-Delhi and Great Lakes Institute of Management. Great Learning is able to leverage the highly qualified, world-class faculty at these universities together with its vast network of 5300+ industry expert mentors to deliver an unmatched learning experience for over 6 million learners from over 170+ countries around the world.