Stock market recommendations: According to Motilal Oswal Financial Services Ltd, the top stock picks for the week (starting January 27, 2025) are Coforge and Persistent Systems. Let’s take a look:
Coforge:
COFORGE saw 8.4% QoQ CC growth in revenue, driven by ServiceNow & Microsoft partnerships, “Quasa” AI platform, & hyperscale & AI rising demand. The USD2b revenue mark is progressing at a rapid pace. COFORGE’s deal win engine remains the best-in-class, with a 2nd consecutive quarter of USD500m+ deal wins. The 12-month executable order book grew 40% YoY. Performance was strong across verticals, geographies, & service lines. We believe COFORGE’s strong executable order book and a rebound in BFS client spending bode well for its organic business. Cigniti could prove to be an effective long-term asset. We expect 4QFY25 YoY growth of 52%/ 48.5% in revenue/PAT.
Persistent Systems:
Persistent Systems reported 3QFY25 revenue of $360.2m, with EBIT increasing ~12% & PAT rising ~15%, driven by improved utilization, cost optimization, offshoring, & better pricing. PSYS aims for USD2b in revenue by FY27 and USD5b by FY31, focusing on top 100 clients, expanding alternative service lines like Private Equity, and developing 12-15 sub-vertical growth engines. We project 19% revenue CAGR for PSYS over FY24-27E, with margin expansion supporting 21%+ EPS growth. This places PSYS in a league of its own as a diversified product engineering & IT services player, justifying a premium valuation multiple.
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