The stock of Persistent Systems nose-dived and fell about 12 per cent last week, as the company announced that its IP-led revenues would decrease by $8 million in the fourth quarter of this fiscal.
IP-led revenues, which are not linked to headcount additions and thus aid margins, account for about 26 per cent of the company’s overall revenues.
Persistent Systems is one of the few mid-tier IT companies to consistently grow in double-digits and stay ahead of the industry rate. The trade body Nasscom expects the industry to grow 7-9 per cent.
The fall in IP sales may be a temporary setback, as the revenue momentum is expected to return in a couple of quarters. With steadily increasing digital revenues and focus on key areas such as IoT (internet of things), Persistent is among the best in terms of revenue growth . The fall in the stock price has made valuation a lot cheaper compared to those of other mid-tiers.