Persistent Systems. Institutional Equities. 4QFY18 Result Update ACCUMULATE. Double Digit Growth With Better Margins Likely In FY19

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1 Result Update Institutional Equities Persistent Systems Reuters: PERS.BO; Bloomberg: PSYS IN Double Digit Growth With Better Margins Likely In FY19 Persistent Systems (PSL) revenues were in line with our estimate, although the margins were better. The latter was because of: (1) IP revenue decline being not as sharp as was feared. (2) Write-back of variable pay because of non-achievement of internal targets. (3) Increase in realisation in both onsite and offshore services. (4) Higher employee utilisation in the services business. Services (~78% of revenues) grew 1.3%, while IP revenues (~22%) declined 20.6%, QoQ. The large fall in IP revenues on QoQ basis largely stemmed from its IBM relationship and can be attributed to timing difference rather than loss of revenues. IP revenues are expected to be recouped in FY19. While digital revenues of PSL have grown 36% YoY in in USD terms, the management believes that execution-related problems prevented it from growing much faster. PSL stated that it has taken corrective steps and believes FY19 could see the impact of these measures. One of them seems to be the merger of its digital and services businesses into an overarching Technology Services business. Accelerite, its non-ibm related IP business has seen a decline of ~9% on QoQ basis and ~31% YoY in revenue terms. This was attributed to Rcloud being shut down and the fact that some its mature products are witnessing lower sales. PSL hinted at purchase of a few products in this business during FY19. While PSL did not give any specific revenue guidance for FY19, it broadly indicated that growth should be in double digits. Margins are expected to be in line or slightly higher than in FY18. PSL indicated its commitment to remain focused on revenue growth and expects SG&A spending to remain high going into FY19. PSL indicated its CE/CLM business will show mid single-digit growth in FY19 (a climb down from ~10% growth hinted at earlier). This stems from the lack of adequate response from IBM sales channel (see our earlier report in this regard: IP Growth Strategy Faces Valuation Threat). There is also an attempt to go direct to these product customers and hence PSL has hired 10 sales persons in Europe the geography which has maximum traction for its CE/CLM product. The higher Investment in sales is likely to translate into incremental revenues across the board and not just in its IP business. Post results, we maintain our estimates for FY19/FY20/FY21. We have upgraded our rating on the stock to Accumulate (from Sell earlier) solely because of the correction in its stock price driven by disappointment in IP sales. This incident highlights risks inherent in the business model of mid-cap companies which have very high client concentration that could lead to volatility in revenue growth and margins. Our target price on PSL is Rs717 (14.3x FY20E EPS, 30% discount to the target P/E multiple of TCS). The discount, we believe, is for the weak business model and lack of revenue predictability. Thus, while we have changed our recommendation on the stock to Accumulate, we are not necessarily very enthused about the company s performance/prospects. IP and low annuity revenues in services hamper visibility on growth: PSL is dependent to a very large extent on its partners like IBM to push its IP-related sales (although it is currently investing in building a direct sales channel). Similarly, its services business has low annuity streams in it which is likely to prevent the company from making a firm commitment on growth in FY19, despite a strong demand scenario. 25 April 2018 ACCUMULATE Sector: Information Technology CMP: Rs726 Target Price: Rs717 Downside: 1% Girish Pai Head of Research girish.pai@nirmalbang.com Key Data Current Shares O/S (mn) 80.0 Mkt Cap (Rsbn/US$mn) 58.1/ Wk H / L (Rs) 878/558 Daily Vol. (3M NSE Avg.) 280,774 Price Performance (%) 1 M 6 M 1 Yr Persistent Systems (7.2) Nifty Index Source Bloomberg Y/E March (Rsmn) YoY (%) QoQ (%) E Dev (%) Net Sales (USD mn) (4.6) Net Sales 7,271 7,919 7, (5.0) 7, Direct Cost 4,644 5,009 4, (1.8) 4, % of Sales SG&A 1,440 1,535 1, (2.5) 1,596 (6.2) % of Sales EBITDA 1,188 1,375 1,111 (6.5) (19.2) 1, EBITDA Margin (%) Depreciation and Amortisation EBIT (13.1) (29.8) EBIT Margin (%) Other Income, Net (.5) (6.0) Forex Gain/(Losses) (28) 50 0 (641.4) PBT 937 1, (16.3) Provision for Tax (4.7) Effective Tax Rate PAT (19.6) NPM (%)

2 Exhibit 1: Key financials Y/E March (Rsmn) FY17 FY18 FY19E FY20E FY21E Revenue (Rsmn) 28,784 30,337 35,329 38,183 39,977 YoY Growth (%) EBIT (Rsmn) 3,049 3,102 4,132 4,165 4,311 % of sales Adj. PAT (Rsmn) 3,0 3,231 3,897 4,019 4,245 YoY Growth (%) FDEPS (Rs) RoE (%) RoCE (%) RoIC (%) P/E (x) P/BV (x) Exhibit 2: Change in our Estimates New Old Change (%) Change in Estimates FY19E FY20E FY21E FY19E FY20E FY21E FY19E FY20E FY21E INR/USD USD Revenue (USD mn) (1.1) Revenue (Rsmn) 35,329 38,183 39,977 35,320 37,860 40, (1.1) EBIT (Rsmn) 4,132 4,165 4,311 4,066 4,196 4, (0.7) 0.7 EBIT Margin (%) PAT (Rsmn) 3,897 4,019 4,245 3,852 3,910 4, FDEPS (Rs) View on the sector: We recently turned tactically positive on Indian IT services sector for the next 12 months after having been negative on it for close to three years (see the report here). This change in stance has been driven by: (1) A modest growth pick-up because of a peaking developed market economic cycle in 2018 that has also been boosted by US tax reforms. (2) Large underweight institutional positioning in the sector. (3) Continued strong domestic equity flows. (4) Near-term negative news flow on financials (a large overweight sector for institutions). (5) Better relative valuation (which is no longer as compelling as it was three to four months ago). Around 80% of the upward revision in our coverage universe s expected market capitalisation has been from P/E multiple expansion and only 20% has come from a revision in earnings. The P/E multiple expansion has been/will be driven by paucity of investment options because of continued strong inflow of domestic money into equities, expensive valuation of popular themes (private financials, consumer staples, consumer discretionary, etc) and near-term challenges faced by financials from higher interest rates and higher stressed asset provisioning. Having said that, structurally, we believe that earnings growth of Tier-1 companies will be in mid-high single-digit at best over FY18-FY20E, and also believe the sector is still not an attractive bet for long-term investors looking for fast earnings compounders. Structural pressures that we have been harping on for the past three years will continue to constrain growth. These include value compression and cannibalisation from automation (which is reaching enterprise scale, in our view, countering the upside from digital projects which are also scaling up) and movement to cloud, and a weaker but improving competitive position in new areas, insourcing, etc. These pressures have led to growth pick-up being pushed back to the last stage of this economic upcycle. The street is anticipating a uniform pickup in growth over FY18-FY20E across Tier-1 companies. We disagree and believe that growth will be dispersed in FY19. In our coverage universe, we believe TCS and HCL Technologies will outperform their Tier-1 peers in organic revenue growth. Contrary to consensus expectations, we expect Infosys to disappoint on the growth front in FY19. For Wipro and Tech Mahindra, organic growth, in our view, will remain muted. We prefer large-caps over mid-caps at current valuations. Mid-caps may witness faster growth pick-up on a low base in FY19 (and from bombed-out margins in some cases), but would advise investors to focus on sustainability and not overpay for a riskier business model. Current valuations of mid-cap stocks factor in strong growth over a two to three-year time frame - which we believe is unlikely. Support will be provided by aggressive capital return policies of many companies in the medium term. 2 Persistent Systems

3 Exhibit 3: Geography-based USD QoQ and YoY revenue growth (%) in Geographies Contribution to revenues (%) USD growth-qoq (%) USD growth-yoy(%) North America 80.9 (8.5) 0.3 Europe India ROW Total (4.6) 7.3 Exhibit 4: Segment-based USD QoQ and YoY growth (%) in Segment Contribution to revenues (%) USD growth-qoq (%) USD growth-yoy(%) Services Digital Alliance 24.3 (21.6) (5.6) Accelerite 6.2 (9.0) (30.7) Total (4.6) 7.3 Exhibit 5: Vertical-based USD QoQ and YoY revenue growth (%) in Vertical Contribution to revenues (%) USD growth-qoq (%) USD growth-yoy (%) ISV Enterprise IP led (20.6) (13.3) Total (4.6) 7.3 Highlights of results and analyst call PSL s revenues of US$116.95mn were down 4.6% QoQ and up 7.3% YoY, respectively, and in line with our expectation of US$116.7mn. Services (~77.7% of revenues) grew 1.3%, while IP revenues (~22.3% of revenues) declined 20.6% QoQ. There was a sharp decline in the Accelerite business (~9% QoQ and ~30.7% YoY) as Rcloud business (migration products) was shut down and the location-based products witnessed a slowdown. The growth in services (up 1.3% in USD terms on QoQ basis) was largely because of the increase in realisation. The management indicated that linear revenues grew 1.3% on QoQ basis. This was on account of an increase in billing rates by 2.8% and reduction in volume by 1.5%. Onsite linear revenues increased 1.2% on account of the hike in billing rate by 2.1% and reduction in volume by 0.9%. Offshore linear revenues grew 1.4% on account of the increase in billing rate by 3% and reduction in volume by 1.6%. EBIT margin declined 320bps QoQ to 9.2% in versus 12.4% in and was better than our expectation of 8.3%. The factors that led to better-than-expected margin are as follows: (1) Improvement in employee utilisation rate (81.2% in vs. 79.9% in ). (2) Increase in realisation for both onsite and offshore work. (3) Write-back of variable payout following non- delivery of internal targets. PSL s management stated that it has merged various service units where the services complemented each other in a project under one head called Technology Service Unit (TSU) with Mr. Sudhir Kulkarni being made responsible for both - delivery as well as sales - for the unit. The digital segment (which constitutes ~24.0% of PSL s revenues) grew 4.1%/36.2% on QoQ and YoY basis, respectively, in USD terms in. However, the management indicated that PSL could have grown quicker had it not faced execution challenges despite having relevant capabilities. The poor execution was a result of people-related problems where growth expectations from partner relationships were not met. The management stated that it has taken steps to improve efficiency which will be visible in 1QFY19 and 2QFY19. We wonder if these execution problems have to do with the very high utilisation of it delivery staff. EBITDA margin for stood at 14.8% as against 17.4% in. The drop in margin on QoQ basis was on account of a seasonally strong and a higher-than-expected drop in IP-related revenues. However, in the opinion of the management, such a dip in revenues is one-off event and some part of the lost business is expected to come back in subsequent quarters. 3 Persistent Systems

4 1QFY13 Institutional Equities Employee utilisation stood at ~81.2% in on account of the decline in headcount. The management stated that the headcount will gradually increase over subsequent quarters. However, the incremental cost of increase in headcount will be offset by the increase in sales, thereby keeping operational efficiency and margins intact. The management has maintained its revenue growth guidance which is to beat industry body Nasscom s growth guidance of 7%-9% on account of a strong order pipeline and stable demand environment. It indicated that FY19 will turn out better than FY18. The management indicated that it will invest in sales rather than product development. The management believes that PSL has enough products to offer to the market and the market is now ready to buy them. The investment will not result in margin reduction. Increased sales will set off the pressure on margins because of investments. The management also stated that it added 10 sales persons in European market which will lead to better control over the sale of CE/CLM and other IBM products and hence translate into better sales. Investment in sales is expected to translate into incremental revenues across the board and not just in a specific segment of its business. PSL s technical headcount declined by 479 to 8,329 in from 8,808 in. The management did not give any guidance on wage hike percentage for employees. However, it stated that the wage hike cycle of FY18 will continue in FY19 (1 July 2018). PSL has appointed Prof. Deepak B. Phatak, recipient of Padma Shri award, who recently retired as a professor of computer science at IIT, Mumbai, and also Mr. Guy Eiferman who is an expert in life sciences and healthcare having held several important positions at Merck & Co., as additional directors (independent members) on its board with immediate effect. PSL s board announced a final dividend of Rs3/share in, thereby taking the total dividend to Rs10/share in FY18. Exhibit 6: USD revenue growth (YoY) has been decelerating since (%) Persistent Systems

5 1QFY13 1QFY13 1QFY13 1QFY13 1QFY13 Institutional Equities Exhibit 7: Onsite/ Offshore revenue mix (%) Onsite revenue mix (%) Offshore revenue mix Exhibit 8: IP continues to contribute a large part of the revenue mix though there was a dip in the quarter Exhibit 9: EBIT margin moves down on account of weak IP led sales (%) IP Mix (%) Gross Margins EBIT Margins SGA Exhibit 10: Attrition rate remains the same for and Exhibit 11: Employee utilisation at its highest level (%) Attrition (TTM %) (%) Blended Utilization (%) Persistent Systems

6 1QFY13 1QFY13 1QFY13 Institutional Equities Exhibit 12: Onsite rates move up a tad 18,000 Onsite billing rate 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Exhibit 13: Offshore rate also perks up 4,400 Offshore billing rate 4,300 4,200 4,100 4,000 3,900 3,800 3,700 3,600 Exhibit 14: Decline in >US$3mn large clients on a QoQ basis Large Clients > $ 3Mn Persistent Systems

7 Exhibit : Quarterly snapshot Year to 31 March (Rsmn) INR/USD USD Revenue (USD mn) INR Revenue 6,771 7,018 7,040 7,455 7,271 7,280 7,613 7,919 7,525 Gross Margin 2,418 2,433 2,502 2,704 2,627 2,497 2,618 2,910 2,607 SGA 1,344 1,376 1,394 1,518 1,440 1,453 1,461 1,535 1,497 EBITDA 1,074 1,058 1,108 1,187 1,188 1,044 1,8 1,375 1,111 Dep & Amorization EBIT Other income (net) PBT 1, , ,019 1,1 1, Tax PAT YoY Growth (%) USD Revenue INR Revenue Gross Profit (0.7) EBIT 5.2 (3.7) (5.2) (7.4) (3.0) (8.8) (13.1) Net Profit (9.9) QoQ Growth (%) USD Revenue (0.9) (4.6) INR Revenue (2.5) (5.0) EBIT (5.3) (12.6) (0.8) (17.9) (29.8) Net Profit 4.3 (9.3) (11.1) (19.6) Margins (%) Gross Margin SGA EBITDA EBIT PBT PAT Persistent Systems

8 Exhibit 16: Key metrics Key Metrics P and L (USD mn) Revenue EBIT PAT P and L (Rsmn) Revenue 6,771 7,018 7,040 7,455 7,271 7,280 7,613 7,919 7,525 EBITDA 1,074 1,058 1,108 1,187 1,188 1,044 1,8 1,375 1,111 PAT Vertical Mix (%) Telecom Infrastructure and Systems Life Sciences & Healthcare Financial Services Segment Revenue Mix (%) Services Digital Alliance accelerite Geographical Mix (%) North Americas Europe Asia-Pacific Project Type (%) Services IP driven Utilization (%) (including Trainees) Revenue Mix (Delivery of IT services) Revenue mix-onsite Revenue mix-offshore Clients Concentration (%) Top client Top 5 clients Top 10 clients Number of Client > USD 3 mn+ clients >1 USD mn+ to <3 USD mn+ clients Employees 9,264 9,389 9,305 9,229 9,460 9,401 9,246 9,109 8,976 Attrition (%) Persistent Systems

9 Exhibit 17: QoQ and YoY data on various parameters QoQ Growth (%) Goegraphy North Americas (2.3) (1.4) 6.1 (1.0) (8.5) Europe (4.2) (8.4) (19.0) 17.8 (9.1) (0.9) (10.9) 7.2 Asia-Pacific (19.0) (10.6) (4.9) 17.9 (20.6) 29.7 (4.0) (68.0) (0.9) 7.6 (3.2) Segmental Telecom (11.7) 20.9 (5.2) (0.2) 1.9 (9.6) (6.5) 32.6 (6.6) Infrastructure and Systems 7.9 (23.7) (1.4) (1.7) Life Sciences & Healthcare (1.1) Financial Services (1.3) Segmental(New Classification) Services (1.7) (1.5) (0.9) (0.5) 3.6 Digital (1.3) Alliance (1.6) 8.9 (10.6) 9.6 (2.3) 12.5 (21.6) accelerite (10.4) 2.0 (16.7) (9.0) Industry Wise ISV (0.2) (2.5) 5.9 (3.1) (1.8) 0.1 (2.3) Enterprise IP led (4.7) 0.5 (7.1) (1.0) 6.9 (3.7) 2.1 (0.1) 6.9 (20.6) Project Type Services 1.6 (0.5) (1.5) IP driven (4.7) 0.5 (7.1) (1.0) 6.9 (3.7) 2.1 (0.1) 6.9 (20.6) Client Concentration Top (1.4) (4.1) (4.0) (5.7) (1.7) 8.7 (11.0) 9.1 (3.0) 12.2 (26.0) Top (1.7) (2.0) 1.0 (2.6) (0.5) 8.6 (6.7) (.7) Top (3.5) 2.3 (2.3) (4.9) (13.9) YoY Growth (%) Goegraphy North Americas Europe (14.1) Asia-Pacific (23.0) (14.5) (62.0) (60.8) (62.7) (67.0) Segmental Telecom (21.5) (12.9) (14.1) Infrastructure and Systems 25.9 (8.9) (9.8) (8.7) (16.7) Life Sciences & Healthcare Financial Services Segmental (New Classification) Services Digital Alliance (5.6) accelerite (.8) (30.7) Industry Wise ISV (0.1) (1.6) 1.7 (0.7) (3.1) Enterprise IP led (0.5) (10.2) (13.3) Project Type Services IP driven (0.5) (10.2) (13.3) Client Concentration Top (5.8) 0.5 (14.4) (5.9) (12.2) Top (5.3) Top (2.5) Persistent Systems

10 Mar-11 Jul-11 Oct-11 Feb-12 Jun-12 Sep-12 Jan-13 May-13 Aug-13 Dec-13 Apr-14 Aug-14 Nov-14 Mar- Jul- Oct- Feb-16 Jun-16 Oct-16 Jan-17 May-17 Sep-17 Dec-17 Apr-18 Mar-11 Jul-11 Dec-11 Apr-12 Sep-12 Jan-13 Jun-13 Oct-13 Mar-14 Jul-14 Dec-14 Apr- Sep- Jan-16 May-16 Oct-16 Feb-17 Jul-17 Nov-17 Apr-18 Mar-11 Jul-11 Dec-11 Apr-12 Sep-12 Jan-13 Jun-13 Oct-13 Mar-14 Jul-14 Dec-14 Apr- Sep- Jan-16 May-16 Oct-16 Feb-17 Jul-17 Nov-17 Apr-18 Institutional Equities Exhibit 18: P/E charts (Rs) 1,400 1,200 1, (x) Price P/E 7-yr mean 1sd -1sd Exhibit 19: P/E premium/(discount) to TCS (x) (10) (20) (30) (40) (50) (60) (70) PSL's 1-Yr fwd P/E discount to TCS Persistent Systems

11 Exhibit 20: Comparative valuation TCS Infosys Wipro HCL Tech TechMahindra Mindtree Persistent Year Ending March March March March March March March 4/25/2018 3,386 1, , , Currency INR INR INR INR INR INR INR Market Value (RsBn) 6,516 2,509 1,378 1, (US$mn) 101,023 38,900 21,365 22,920 9,253 2, March 2019 Target Price 3,176 1, , Upside/(downside) -6.2% 0.2% 5.2% -1.3% -10.9% -42.3% -1.2% Recommendation Accumulate Accumulate Accumulate Accumulate Accumulate Sell Accumulate FDEPS (Rs) FY FY FY18E FY19E FY20E PE (x) FY FY FY18E FY19E FY20E EV/EBITDA (x) FY FY FY18E FY19E FY20E EV/Sales (x) FY FY FY18E FY19E FY20E RoIC (%) FY FY FY18E FY19E FY20E Source: Bloomberg, Nirmal Bang Institutional Equities Research 11 Persistent Systems

12 Financials Exhibit 21: Income statement Y/E March (Rsmn) FY17 FY18 FY19E FY20E FY21E Average INR/USD Net Sales (USD mn) YoY Growth (%) (1.1) Net Sales 28,784 30,337 35,329 38,183 39,977 YoY Growth (%) Cost of Sales & Services 18,518 19,704 22,465 24,348 25,470 % of sales Gross Margin 10,266 10,633 12,864 13,835 14,507 % of sales SG& A 5,727 5,946 7,019 7,653 8,045 % of sales EBITDA 4,539 4,687 5,845 6,182 6,462 % of sales Depreciation 1,490 1,585 1,713 2,017 2,1 EBIT 3,049 3,102 4,132 4,165 4,311 % of sales Other income (net) 958 1,190 1,064 1,193 1,350 PBT 4,007 4,292 5,196 5,358 5,661 -PBT margin (%) Provision for tax 992 1,062 1,299 1,340 1,4 Effective tax rate (%) Net profit 3,0 3,231 3,897 4,019 4,245 -Growth (%) Net profit margin (%) Exhibit 23: Balance sheet Y/E March (Rsmn) FY17 FY18 FY19E FY20E FY21E Equity capital Reserves & surplus 18,193 20,472 22,960 25,042 27,241 Net worth 18,993 21,272 23,760 25,842 28,041 Deferred tax liability Other liabilities Total loans Total liabilities 19,291 21,448 23,937 26,018 28,218 Goodwill Net block (incl CWIP) 5,573 5,097 4,603 3,854 3,021 Investments 6,839 8,797 8,797 8,797 8,797 Deferred tax asset Other non-current assets Other current assets 3,411 4,585 5,201 5,209 5,389 Debtors 4,754 4,847 6,139 6,149 6,368 Cash & bank balance 1,510 2,414 4,052 6,874 9,699 Total current assets 9,675 11,846,392 18,231 21,457 Total current liabilities 4,173 4,870 5,433 5,441 5,636 Net current assets 5,502 6,976 9,959 12,790,822 Total assets 19,291 21,448 23,937 26,018 28,218 Exhibit 22: Cash flow (Y/E March) FY17 FY18 FY19E FY20E FY21E EBIT 3,049 3,102 4,132 4,165 4,311 (Inc.)/dec. in working capital (1,762) (570) (1,345) (9) (206) Cash flow from operations 1,287 2,532 2,787 4,7 4,105 Other income 958 1,190 1,064 1,193 1,350 Depreciation & amortisation 1,490 1,585 1,713 2,017 2,1 Tax paid (992) (1,062) (1,299) (1,340) (1,4) Dividends paid (761) (800) (1,409) (1,937) (2,046) Net cash from operations 1,982 3,445 2,856 4,090 4,144 Capital expenditure 1,650 1,027 1,218 1,268 1,319 Net cash after capex 332 2,419 1,638 2,822 2,825 Inc./(dec.) in debt 127 (136) (Inc.)/dec. in investments 135 (1,145) Equity issue/(buyback) Cash from financial activities 261 (1,280) Others (5) (234) Opening cash 1,432 1,510 2,414 4,052 6,874 Closing cash 1,510 2,414 4,052 6,874 9,699 Change in cash ,638 2,822 2,825 Exhibit 24: Key ratios Y/E March FY17 FY18 FY19E FY20E FY21E Per Share (Rs) EPS FDEPS Dividend Per Share Book Value Dividend Payout Ratio (%) Return ratios (%) RoE RoCE ROIC Tunover Ratios Asset Turnover Ratio Debtor Days (incl. unbilled Rev) Working Capital Cycle Days Valuation ratios (x) PER P/BV EV/EBTDA EV/Sales M-cap/Sales Dividend Yield Persistent Systems

13 Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 Institutional Equities Rating track Date Rating Market price (Rs) Target price (Rs) 21 September 20 Sell October 20 Sell December 20 Sell January 2016 Under Review January 2016 Under Review March 2016 Sell March 2016 Sell April 2016 Sell June 2016 Sell July 2016 Sell October 2016 Sell December 2016 Sell January 2017 Sell January 2017 Sell February 2017 Sell April 2017 Sell June 2017 Sell July 2017 Sell September 2017 Sell October 2017 Sell December 2017 Sell December 2017 Under Review January 2018 Under Review March 2018 Sell April 2018 Accumulate Rating track graph Not Covered Covered 13 Persistent Systems

14 DISCLOSURES This Report is published by Nirmal Bang Equities Private Limited (hereinafter referred to as NBEPL ) for private circulation. NBEPL is a registered Research Analyst under SEBI (Research Analyst) Regulations, 2014 having Registration no. INH NBEPL is also a registered Stock Broker with National Stock Exchange of India Limited and BSE Limited in cash and derivatives segments. NBEPL has other business divisions with independent research teams separated by Chinese walls, and therefore may, at times, have different or contrary views on stocks and markets. NBEPL or its associates have not been debarred / suspended by SEBI or any other regulatory authority for accessing / dealing in securities Market. NBEPL, its associates or analyst or his relatives do not hold any financial interest in the subject company. NBEPL or its associates or Analyst do not have any conflict or material conflict of interest at the time of publication of the research report with the subject company. NBEPL or its associates or Analyst or his relatives do not hold beneficial ownership of 1% or more in the subject company at the end of the month immediately preceding the date of publication of this research report. NBEPL or its associates / analyst has not received any compensation / managed or co-managed public offering of securities of the company covered by Analyst during the past twelve months. NBEPL or its associates have not received any compensation or other benefits from the company covered by Analyst or third party in connection with the research report. Analyst has not served as an officer, director or employee of Subject Company and NBEPL / analyst has not been engaged in market making activity of the subject company. Analyst Certification: I/We, Mr. Girish Pai the research analysts is the author of this report, hereby certify that the views expressed in this research report accurately reflects my/our personal views about the subject securities, issuers, products, sectors or industries. It is also certified that no part of the compensation of the analyst(s) was, is, or will be directly or indirectly related to the inclusion of specific recommendations or views in this research. The analyst(s) principally responsible for the preparation of this research report and has taken reasonable care to achieve and maintain independence and objectivity in making any recommendations. 14 Persistent Systems

15 Disclaimer Stock Ratings Absolute Returns BUY > % ACCUMULATE -5% to% SELL < -5% This report is for the personal information of the authorized recipient and does not construe to be any investment, legal or taxation advice to you. NBEPL is not soliciting any action based upon it. Nothing in this research shall be construed as a solicitation to buy or sell any security or product, or to engage in or refrain from engaging in any such transaction. In preparing this research, we did not take into account the investment objectives, financial situation and particular needs of the reader. This research has been prepared for the general use of the clients of NBEPL and must not be copied, either in whole or in part, or distributed or redistributed to any other person in any form. If you are not the intended recipient you must not use or disclose the information in this research in any way. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. NBEPL will not treat recipients as customers by virtue of their receiving this report. This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject NBEPL & its group companies to registration or licensing requirements within such jurisdictions. The report is based on the information obtained from sources believed to be reliable, but we do not make any representation or warranty that it is accurate, complete or up-to-date and it should not be relied upon as such. We accept no obligation to correct or update the information or opinions in it. NBEPL or any of its affiliates or employees shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. NBEPL or any of its affiliates or employees do not provide, at any time, any express or implied warranty of any kind, regarding any matter pertaining to this report, including without limitation the implied warranties of merchantability, fitness for a particular purpose, and non-infringement. The recipients of this report should rely on their own investigations. This information is subject to change without any prior notice. NBEPL reserves its absolute discretion and right to make or refrain from making modifications and alterations to this statement from time to time. Nevertheless, NBEPL is committed to providing independent and transparent recommendations to its clients, and would be happy to provide information in response to specific client queries. Before making an investment decision on the basis of this research, the reader needs to consider, with or without the assistance of an adviser, whether the advice is appropriate in light of their particular investment needs, objectives and financial circumstances. There are risks involved in securities trading. The price of securities can and does fluctuate, and an individual security may even become valueless. International investors are reminded of the additional risks inherent in international investments, such as currency fluctuations and international stock market or economic conditions, which may adversely affect the value of the investment. Opinions expressed are subject to change without any notice. Neither the company nor the director or the employees of NBEPL accept any liability whatsoever for any direct, indirect, consequential or other loss arising from any use of this research and/or further communication in relation to this research. Here it may be noted that neither NBEPL, nor its directors, employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profit that may arise from or in connection with the use of the information contained in this report. Copyright of this document vests exclusively with NBEPL. Our reports are also available on our website Access all our reports on Bloomberg, Thomson Reuters and Factset. Team Details: Name Id Direct Line Rahul Arora CEO rahul.arora@nirmalbang.com - Girish Pai Head of Research girish.pai@nirmalbang.com / 18 Dealing Ravi Jagtiani Dealing Desk ravi.jagtiani@nirmalbang.com , Pradeep Kasat Dealing Desk pradeep.kasat@nirmalbang.com /8101, Michael Pillai Dealing Desk michael.pillai@nirmalbang.com /8103, Nirmal Bang Equities Pvt. Ltd. Correspondence Address B-2, 301/302, Marathon Innova, Nr. Peninsula Corporate Park, Lower Parel (W), Mumbai Board No. : /1; Fax. : Persistent Systems