Prabhudas Lilladher (PL) has retained 'Accumulate' on Persistent Systems (PSYS) with target price of Rs 171 with current market price (CMP) of Rs 129 in its report.

Commenting on the investment rationale, PL said, ''The endeavour of management was to differentiate itself from tier‐1 IT services player as a SMAC wherein PSYS is holding pole position in Enterprise Digital Transformation (EDT) different from IT modernization (Tier‐1). PSYS highlighted about the value proposition that it brings in IP acquisition and creation. We see these strategies to help PSYS to position itself uniquely in the market. We roll our model for FY17.

PSYS has tried to differentiate itself from the tier‐1 peers by positioning itself as leader in EDT. Tier‐1 companies are more focused on IT modernization by making enterprise SMAC ready wherein the project sizes are big and complex. However, the strength of PSYS in EDT is recognized by third party consultants. PSYS strength in OPD is helping it to quickly identify opportunities and deliver products (Apps) in Digital space. We see this as an endeavour of PSYS to position itself as leader in one segment (EDT) of bi‐modal Digital approach of CIOs

We view Persistent strategy to differentiate itself as immaculate. But, we may see a bumpy ride on EBITDA margin as management spends on the execution. Moreover, the recent run‐up restricts near term upside. Retain 'Accumulate'.''

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