- Morgan Stanley initiates coverage on Persistent Systems with an ‘overweight' rating
- Sets a target price of Rs 840 -- a near 24 percent upside from Tuesday's close
- Says company's investment in product development to pay dividend
Persistent Systems Ltd.'s shift from offshore software product development services to partnership-led platform-based and intellectual property offerings sets it apart from other Indian technology companies. That's the word coming in from international brokerage house Morgan Stanley, which has initiated coverage on the stock with an 'Overweight' rating.
This despite the brokerage house saying that the current stock price appears expensive to its peers.
The changing business model will also help the company improve its margins by approximately 200 basis points over the next three years, said Morgan Stanley in its research note on the company.
Persistent Systems' recent decline in margins was not due to pricing pressure but higher investments, added the brokerage house.
Also Read: Persistent Systems Joins The Digital Business Bandwagon
High client concentration, decline in services and failure in capitalising on new investments are the two major risks for the company, said Morgan Stanley. Muted growth in digital ramp-up may also bear on the company's margins.
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