Despite the COVID-19 cycle, mid-tier IT services company Persistent Systems was able to double its revenues in over four years. And more specifically, in three years, the company moved from roughly $501 million to $1 billion plus, said Sandeep Kalra, CEO and Executive Director of Persistent Systems. Kalra said these cycles will come and go, but the company will stand by its aspiration of $2 billion over the next four years.

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Speaking to CNBC-TV18 on Friday, July 21, the CEO maintained that the company will grow anywhere between 3-5 percent, depending on the macro environment. "Our endeavour is to maintain this and we are expecting the macro to turn better over the next 2-3 quarters, and then we hope to have the acceleration back again.

"If you look at the quarter gone by, we delivered roughly 3 percent in US dollar terms and similarly in rupee terms. From a year-on-year perspective, this is a pretty healthy growth coming in at about 17.1 percent in dollar terms and 23.6 percent in rupee terms," Kalra said.

Visa cost hit margins by 40 bps in Q1

Kalra further said that a cost of getting visas hit margin by 40 basis points in the first quarter. "If you look at our financials seasonally, if you compare the same quarter for the last several years, there is a visa cost that comes in during this quarter, which has a seasonality that happens. So that contributed to an about 40 basis points impact on the profitability. There were a few small points like amortisation going up by 20 basis points, 10 basis points of doubtful debt provision that we factor in conservatively in the given macro. Factoring for all of that, we were at 15.4 percent margin," he explained.

Kalra noted that margins will expand by 200-300 basis points over the medium term.

He said there were certain deals that have spilled over to the next quarter. "There are no deals lost or gone. Deals are just taking a little bit more time to close, given the macro and given the long weekend, starting the July 1, the July 4 long weekend."

'Not deferred compensation'

The CEO clarified that the company has not deferred any compensation, be it the management team, or employees at large. Persistent has given about 7.50 percent average hikes in India, and about 3.5-4 percent globally.

"That is the average wage hike. Obviously, some will get more, some will get less. That will have an impact in this quarter. But we are hoping — with the revenue increases and other cost control measures — to have an impact of 1.25-1.5 percent. And we will try and neutralise that as well as we go along," he noted.

Persistent Systems on Thursday, July 20, posted consolidated net profit of Rs 229 crore for the quarter ended June, up 8 percent from Rs 212 crore reported in the previous year quarter.

Revenue from operations during the first quarter rose 23 percent year-on-year to Rs 2,321 crore. It was Rs 1,878 crore in the same quarter of last year.

The company has reported an EBITDA growth of 27 percent at Rs 423 crore for the first quarter, with margins at 18.2 percent.

On Friday, Persistent's shares closed 5.59 percent lower at Rs 4,762 on the NSE.

(Edited by : Shoma Bhattacharjee)

First Published:Jul 21, 2023 6:54 PM IST