Persistent Systems, Happiest Minds- Jewels To Rely On Amid Volatile Macro: ICICI Securities Initiates Coverage

ICICI Securities Report

Amid adverse macro environment for IT services spending with right shifting of demand, as clients want to focus on critical areas of tech spending, we highlight two stocks in Indian IT Services space - Persistent Systems Ltd. and Happiest Minds Technologies Ltd.- that are well positioned to deliver industry-leading growth in FY24E and beyond with expectations of mid-high teens organic revenue growth.

Secular shift to smaller-sized deals to enable digital transformation of enterprises has created a level-playing field for both large and mid-tier IT vendors.

Despite broader macro concern that discretionary digital spend is getting postponed, we would like to highlight that both Persistent Systems and Happiest Minds are involved in building digital solutions for clients around software-as-a-system, cloud, artificial intelligence, internet of things and cyber security which are mission critical to either generate revenues for clients or conduct their daily operations.

Hence, a significant portion of their revenues is being generated outside annual technology budgets, which is seeing certain pressure.

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