Sell on Persistent Systems with a target at Rs 650: Citigroup

Citigroup initiates coverage on Persistent Systems with a 12-month target price of Rs 650. The near to medium terms setup is tough despite longer term positives, said the global investment bank.

Challenges in ISV segment which accounts for almost 46 per cent of revenues could weigh on overall growth, said the Citigroup report. The D-Street expects around 150bp EBIT margin pick-up which is aggressive. The valuations are high at around 17x for 11% EPS CAGR.