Persistent shares surge 3% post acquisition. Ticks all right boxes, says ICICI Securities
Persistent Systems' shares skyrocketed to a record high after sealing a deal to acquire Starfish Associates, boosting their AI offerings.
Shares of rose 3.5% to its fresh all-time high of Rs 4,759 on today after entering into a share purchase agreement for the acquisition of , which ticks all the right boxes according to ICICI Securities.“In terms of Regulation 30 of the (Listing Obligations and Disclosure Requirements) Regulations, 2015 read with SEBI Circular bearing ref. no. SEBI/HO/CFD/CFD-PoD-1/P/CIR/2023/123 dated July 13, 2023, we hereby inform you that Persistent Systems Inc, USA (wholly owned subsidiary) has entered into a Stock Purchase Agreement on July 2, 2024 (US Time) for the acquisition of Starfish Associates, LLC, USA,” said Persistent in a filing to the stock exchanges.
While retaining an ‘add' rating on the company with a target price of Rs 4,720, domestic brokerage firm ICICI Securities said that this acquisition is favorable for Persistent as it augments its AI offerings.
“We reckon that AI’s impact (especially generative AI) on the BPO business will be most drastic and immediate among other service lines and this acquisition gives PSYS an opportunity to be ahead of the curve in contact centre automation domain,” said Ruchi Mukhija, Analyst at ICICI Securities.
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The domestic brokerage firm believes that this gives Persistent access to fortune 500 clients, opening doors for cross-selling as being a platform, Starfish also has a better than company margin profile and will likely be EPS accretive for the company.
Starfish is a plug-in platform with a data repository which connects CRM (i.e.Oracle etc) with communication systems (google cloud, AWS etc). It acts as a pipeline and aids easy transition from on-prem to cloud or from one vendor to another by storing customer details, onboarding/offboarding.
In the last one year, Persistent Systems’ shares have shown an impressive growth of 95%, while in the current calendar year, they have increased by 29.5%.
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Source: Stocks-Markets-Economic Times
