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ICICI Securities Report
We have analysed the just-concluded quarter results of global software-as-a-system companies with whom Indian IT players have ‘sell-to' and ‘sell-with' partnerships and digital engineering companies, which can be considered as a proxy for high-end digital services demand.
Key takeaways are:
most SaaS companies have reported June/July 2023 quarter revenue growth higher than their guidance and some have also upgraded full-year CY23 guidance, indicating improvement in demand despite elongated deal cycles;
most digital engineering companies have cut their guidance due to lower demand for discretionary tech spends;
while enterprise gen-AI applications are still in experimentation stage, AI-led wave is likely to drive demand for data engineering, cloud computing, content creation, AI native apps, and new UX and UI designs.
Persistent Systems Ltd. has significant number of employees trained in salesforce, ~12% of its workforce, highest in our coverage universe. This implies that Persistent Systems has highest revenue exposure (~15-20%) from salesforce partnership (sell-to, sell-with and sell-through) within our coverage universe.
We re-iterate our positive stance on Persistent Systems given that salesforce has increased the mid-point of its full year guidance, which augurs well for Persistent.
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