Summer Internship Project Report

On
“Forecasting and Valuation of Persistent Systems Ltd”

NIIT TECHNOLOGIES

Submitted in partial fulfillment of the requirements for the Two Year Full Time
Post Graduate Diploma in Management

By: Under the guidance of

Student Name : SHRIMOYEE GHOSH 1. Faculty Mentor’s Name:
Dr. ALOK BHARDWAJ
I.T.S- Mohan Nagar
Enrollment No: 2017138 2. Industry Mentor’s Name:
Mr. SAURABH GOEL
Batch: PGDM 2017-19 Designation: GENERAL MANAGER

INSTITUTE OF TECHNOLOGY & SCIENCE, MOHAN NAGAR,

GHAZIABAD

Session: 2017-19

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 Annexure-B
CERTIFICATE OF ORIGINALITY

I hereby declare that this Summer Internship Project is my own work and that to the best of my
knowledge and belief, it reproduces no material previously published or written that has been
accepted for the award of any other degree of diploma, except where due acknowledgement has
been made in the next.

(SHRIMOYEE GHOSH)
Enrollment No. : 2017138
Date :

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 Annexure- C

(On Organization Letterhead)

Date: ………….

TO WHOMSOEVER IT MAY CONCERN

This is to certify that Ms SHRIMOYEE GHOSH is student of Institute of Technology and

Science, PGDM Batch (2017-19) has successfully completed his/ her summer internship under
the guidance of Mr. SAURABH GOEL (Industry Mentor’s Name) for a duration of 8 weeks,
from 23.05.2018 to 13.07. 2018.

During his/her tenure with us, we found her ………………………..

We wish her all the very best for future endeavours.

Signature
Name
Designation
Organization seal

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 Annexure- D

CERTIFICATE

This is to certify that Ms. SHRIMOYEE GHOSH PGDM (2017-19 Batch) a student of Institute
of Technology and Science has undertaken the project on “Project Title”. The project has been
carried out by the student in partial fulfillment of the requirements for the award of PGDM,
under my guidance and supervision.

I am satisfied with the work of Ms. SHRIMOYEE GHOSH.

Date:

Faculty Mentor’s Name: …………

(Signature)

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 Acknowledgement
This project on Forecasting and Valuation of Persistent Systems Ltd could not see the light
if I had not received immense help from many persons associated directly or indirectly.

It is my greatest pleasure to express my respect and gratitude to my industry mentor Mr.

SAURABH GOEL (General Manager of NIIT Technologies) for guiding me in choosing
my topic and having the patience to clear my doubts I had while compiling the areas of
project.

Words are inadequate to express the extent of gratitude towards my faculty mentor Dr.
ALOK BHARDWAJ whose valuable suggestions, unconditional help, support and constant
encouragement enabled me to complete this project.

I would be failing in my duty if I do not acknowledge the contributions of different authors

and experts in this field. The entire project report is the outcome of the ideas gained from
them.

SHRIMOYEE GHOSH

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1. Executive Summary
This project report is based on forecasting and valuation of one of the close competitors of
NIIT Technologies, Persistent Systems Ltd. This report provides the concept of forecasting
and valuation of companies and the logic behind each assumptions of every heads.

A financial forecast is an estimation or projection of likely future income or revenue and

expenses. Based on this forecasting , financial plan of the company can be constructed that
includes saving, investing or planning for obtaining additional income to supplement his
personal finances. Effective forecasting that allows management to make sound decisions.
Financial forecasting can be done to determine sales and derive costs of customer
acquisition. Having accurate and effective forecasting of business finances including
current revenue, revenue potential, and expenses helps to ensure the organization runs
smoothly. Financial forecasting is a critical part of business planning. Even though many
such events are unpredictable, it is very possible to put plans in place that will prevent such
events, or, at the very least, ensure that outcomes from such events are kept to a minimum.

Business valuation is the process of determining the economic value of a business or

company. Business valuation can be used to determine the fair value of a business for a
variety of reasons, including sale value, establishing partner ownership and even divorce
proceedings. Two models of valuations have been used in this report which are Discounted
Cash Flow Model and Net Asset Valuation model.

Detailed information of NIIT Technologies has been given in the introduction part of the
project report. The company’s vision is Be the First Choice. Mission of the company is
very unique “Enable Enterprise Manage Information Better”. As we know that IT industry
is growing rapidly, so NIIT Technologies also diversifying their business with the objective
of “Deliver exceptional value and industry leading growth”. The company believes its
value the We, NIIT, believe that our growth is the derivative of the growth of each one of

6
us. It is the duty of each one of us to espouse and give active effect to the values, motives
and beliefs we state here.

This report contains the detail performance analysis of one of the competitors of NIIT
Technologies which is Persistent Systems Ltd. Forecasting and valuation of Persistent
Systems Ltd. is done along with ratio analysis.

This study is based on descriptive research, as it involves gathering data that describe
events and then organizes, tabulates, depicts an describe the data. Visual aids charts and
graphs has been used to help the reader in understanding the data distribution.

This study also involved ratio analysis of various ratios like profitability ratios, turnover
ratio, growth rate etc. to calculate the financial condition of the company itself and to
compare its performance among its peer groups.

To forecast the next three financial years of the company which FY 2019, FY 2020 and FY
2021, data of last five financial years have been observed. Statement of Profit and Loss,
Balance Sheet, Cash Flow Statement of the company has been taken from the annual report
for the purpose of forecasting and valuation.

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 2. List of contents
INTRODUCTION OF FORECASTING AND VALUATION
9-13
INTRODUCTION OF IT INDUSTRY
INTRODUCTION OF NIIT TECHNOLOGIES 14-16
INTRODUCTION OF PERSISTENT SYSTEMS LTD. 17-30
31-35
ANALYSIS OF 3Cs 36
OBJECTIVE 37
38
RESEARCH METHODOLOGY
DATA ANALYSIS, OBSERVATIONS AND PRESENTATION 39-63
OF THE ISSUES CONCERNING THE PROJECT WORK

PROFIT AND LOSS STATEMENT 39-43

BALANCE SHEET 43-49
CASH FLOW STATEMENT 50-51
RATIO ANALYSIS OF PERSISTENT 52-59
RATIO ANALYSIS AMONG COMPETITORS 60-62
VALUATION 63

FINDINGS AND RECOMMENDATIONS FOR COMPANY

ADOPTION AND IMPLEMENTATION 64-65
CONCLUSION 65
REFERENCE 66
ANNEXURE 67-80

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 1. Introduction
Forecasting

Forecasting is a decision making tool which is used by many financial analyst to help in
budgeting, planning and estimating future growth. It is the attempt to predict future outcomes
based on past events and management insight. It is an estimation or projection of likely future
income or revenue and expenses. Based on this forecasting , financial plan of the company can
be constructed that includes saving, investing or planning for obtaining additional income to
supplement his personal finances. Effective forecasting that allows management to make sound
decisions. Financial forecasting can be done to determine sales and derive costs of customer
acquisition. Having accurate and effective forecasting of business finances including current
revenue, revenue potential, and expenses helps to ensure the organization runs smoothly.
Financial forecasting is a critical part of business planning. Even though many such events are
unpredictable, it is very possible to put plans in place that will prevent such events, or, at the
very least, ensure that outcomes from such events are kept to a minimum.

Importance of forecasting in business are:

Promotion of new business:

Forecasting is of utmost importance in setting up a new business. It is not an easy task to start a new
business as it is full of uncertainties and risks. With the help of forecasting the promoter can find out
whether he can succeed in the new business; whether he can face the existing competition; what is the
possibility of creating demand for the proposed product etc. Proper forecasting will help to minimise the
role of luck or chance in determining business success or failure. A successful promoter is also the
prophet of economic conditions.

Estimation of financial requirements:

The importance of forecasting can’t be ignored in estimating the financial requirements of a concern.
Efficient utilisation of capital is a delicate issue before the management. No business can survive without

9
adequate capital. But adequacy of either fixed or working capital depends entirely on sound financial
forecasting.

Financial estimates can be calculated in the light of probable sales and cost thereof.

Smooth and continuous working of a concern:

‘Forecasting of earnings’ ensures smooth and continuous working of an enterprise, particularly

to newly established ones. By forecasting, these concerns can estimate their expected profits or
losses. The object of a forecast is to reduce in black and white the details of working of a
concern.

Correctness of management decisions:

The correctness of management decisions to a great extent depends upon accurate forecasting.

Success in business:

The accurate forecasting of sales helps to procure necessary raw materials on the basis of which many
business activities are undertaken. The accurate sales forecasting becomes the basis for several other
budgets. In the absence of accurate sales forecasting, it is difficult to decide as to how much production
should be done.

Thus, to a great extent, the budgets of other departments depend upon the compilations based on the
sales forecasts and the accuracy of these budgets also depends upon correctness of sales forecasting.
Thus, the success of a business unit depends on the accurate forecasting by the various departments.

Complete Control:

Forecasting provides the information which helps in the achievement of effective control. The managers
become aware of their weaknesses during forecasting and through implementing better effective
control they can overcome these weaknesses.

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Co-Operation and co-ordination:

Forecasting is not one man’s job. It needs proper co-ordination of all departmental heads in a company.
Thus, by bringing participation of all concerned in the process of forecasting, team spirit and co-
ordination is automatically encouraged.

Types of forecasting are:

 Judgement forecasting (gut feeling) : Judgement forecasting uses only intuition and
experience. Judgement forecasting is best use where there is little or no historical
data such as new product launches, competitor actions or new growth plans.

 Quantitative forecasting : It uses analytics to analyze large amounts of historical data

in order to discern trends and patterns. It is excellent at churning through large
amounts of data and is less prone to bias.

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 Valuation
Valuation is the process of determining the current worth of an asset or a company. An analyst
placing a value on a company looks at the company's management, the composition of its capital
structure, the prospect of future earnings, and the market value of assets. There are many
techniques used for doing a valuation which are:

 Discounted Cash Flow (DCF): The DCF analysis is the most thorough way to value a
company. It estimates the attractiveness of an investment opportunity. DCF analyses use
future free cash flow projections and discounts them, using a required annual rate, to
arrive at present value estimates. A present value estimate is then used to evaluate the
potential for investment. If the value arrived at through DCF analysis is higher than the
current cost of the investment, the opportunity may be a good one.

DCF = [CF1 / (1+r)1] + [CF2 / (1+r)2] + ... + [CFn / (1+r)n]

CF = Cash Flow, r= discount rate (WACC)

 Dividend Discount Model (DDM) : It is used to calculate true value of firm based on the
dividend paid to the shareholder. It is a procedure for valuing a stock's price
by discounting predicted dividends to the present value. If the value obtained from the
DDM is higher than the current trading price of shares, then the stock is undervalued.

DDM = dividend per share/( discount rate- dividend growth rate)

 Residual Income valuation: Residual income valuation (RIV; also, residual

income model and residual income method, RIM) is an approach to equity valuation that
formally accounts for the cost of equity capital. Here, "residual" means in excess of
any opportunity costs measured relative to the book value of shareholders'
equity; residual income(RI) is then the income generated by a firm after accounting for
the true cost of capital. The approach is largely analogous to the EVA/MVA based

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 approach, with similar logic and advantages.

Residual income = Net Income − Equity Charge ; Equity Charge = Equity Capital x Cost
of Equity

V0 = BV0 +∑𝑚−1
𝑡=1 [RIt/(1+r)t + Tm/(1+r)m-1] ; Tm= RIm/ (r-g)

 Asset Based Model : An asset-based approach is a type of business valuation that focuses
on a company's net asset value (NAV), or the fair-market value (FMV), of its total assets
minus its total liabilities to determine what it would cost to recreate the business.

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 2. Industry profile with data and source :

 INFORMATION TECHNOLOGY INDUSTRY IN INDIA

Introduction

The global sourcing market in India continues to grow at a higher pace compared to the IT-BPM
industry. India is theleading sourcing destination across the world, accounting for approximately
55 per cent market share of the US$ 185-190 billion global services sourcing business in 2017-
18. Indian IT & ITeS companies have set up over 1,000 global delivery centres in about 80
countries across the world.
More importantly, the industry has led the economic transformation of the country and altered
the perception of India in the global economy. India's cost competitiveness in providing IT
services, cost savings of 60–70 per cent over source countries, continues to be the mainstay of its
Unique Selling Proposition (USP) in the global sourcing market. However, India is also gaining
prominence in terms of intellectual capital with several global IT firms setting up their
innovation centres in India.
India has become the digital capabilities hub of the world with around 75 per cent of global
digital talent present in the country.

Market Size

The internet industry in India is likely to double to reach US$ 250 billion by 2020, growing to
7.5 per cent of gross domestic product (GDP). The number of internet users in India is expected
to reach 730 million by 2020, supported by fast adoption of digital technology, according to a
report by National Association of Software and Services Companies (NASSCOM).
Indian IT exports increased to US$ 126 billion in FY18 while domestic revenues (including
hardware) advanced to US$ 41 billion.
Indian IT and BPM industry is expected to grow to US$ 350 billion by 2025 and BPM is
expected to account for US$ 50-55 billion out of the total revenue.

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Total spending on IT by banking and security firms in India is expected to grow 8.6 per cent
year-on-year to US$ 7.8 billion by 2017.
India’s Personal Computer (PC) shipment advanced 11.4 per cent year-on-year to 9.56 million
units in 2017 on the back of rise in the quantum of large projects.
Revenue from digital segment is expected to comprise 38 per cent of the forecasted US$ 350
billion industry revenue by 2025.

Investments/ Developments

Indian IT's core competencies and strengths have attracted significant investments from major
countries. The computer software and hardware sector in India attracted cumulative Foreign
Direct Investment (FDI) inflows US$ 29.825 billion from April 2000 to December 2017,
according to data released by the Department of Industrial Policy and Promotion (DIPP).
Leading Indian IT firms like Infosys, Wipro, TCS and Tech Mahindra, are diversifying their
offerings and showcasing leading ideas in blockchain, artificial intelligence to clients using
innovation hubs, research and development centres, in order to create differentiated offerings.

Some of the major developments in the Indian IT and ITeS sector are as follows:

 Nasscom has launched an online platform which is aimed at up-skilling over 2 million
technology professionals and skilling another 2 million potential employees and students.
 Revenue growth in the BFSI vertical reached nearly 9 per cent y-o-y in the fourth quarter
of 2017-18.
 As of March 2018, there were over 1,140 GICs operating out of India.
 Private Equity (PE)/Venture Capital (VC) investments in India's IT & ITeS sector
reached US$ 7.6 billion during April-December 2017.

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Government Initiatives
Some of the major initiatives taken by the government to promote IT and ITeS sector in India are
as follows:

 As a part of Union Budget 2018-19, NITI Aayog is going to set up a national level
programme that will enable efforts in AI* and will help in leveraging AI* technology for
development works in the country.
 The Government of India is going to explore new opportunities in various sectors such as
providing BPO service from home, digital healthcare and agriculture to achieve the target
of making India a US$ 1 trillion digital economy.

Road Ahead
India is the topmost offshoring destination for IT companies across the world. Having proven its
capabilities in delivering both on-shore and off-shore services to global clients, emerging
technologies now offer an entire new gamut of opportunities for top IT firms in India. Export
revenue of the industry is expected to grow 7-9 per cent year-on-year to US$ 135-137 billion in
FY19.

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  NIIT TECHNOLOGIES

INTRODUCTION

NIIT Technologies is a leading IT solutions organization, servicing customers in the Americas,

Europe, Asia and Australia. It offers services in application development and maintenance,
enterprise solutions including managed services and business process outsourcing to enterprise in
the financial services, travel & transportation, manufacturing/ distribution, and Government
sectors.

NIIT Technologies adheres to major global benchmarks and standards, having secured the ISO
9001:2000 certifications and the ISO:27001 Information Security Management accreditation and
follows global standards of development. It has been assessed at Level 5 of SEI CMMi version
1.2. The business process outsourcing (BPO) arm conforms to the highest quality standards such
as COPC and Six Sigma. Its data center operations are assessed at the international ISO 20000 IT
management standards.

Focused on Digital Services, the Company is helping businesses design agile, scalable and
digital operating models.

TYPE PUBLIC COMPANY

INDUSTRY IT SERVICES, IT CONSULTING

FOUNDED 2004

FOUNDER RAJENDRA S. PAWAR, VIJAY K.

THADANI

HEADQUARTER NOIDA, INDIA

AREA SERVED WORLD WIDE

KEY PEOPLE ARVIND THAKUR (VICE CHAIRMAN

AND MANAGING DIRECTOR), SUDHIR
SINGH ( CHIEF EXECUTIVE OFFICER)

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REVENUE INR 2,991.4 Crores (FY18)

NUMBER OF EMPLOYEE 9,764 (Q1FY19)

WEBSITE www.niit-tech.com

VISION :Be the First Choice

MISSION: Enable Enterprises Manage Information Better

OBJECTIVE: Deliver exceptional value and industry leading growth

SERVICE VISION: New Ideas, More Value

VALUES AND BELIEFS of NIIT Technologies

We, NIIT, believe that our growth is the derivative of the growth of each one of us. It is the duty
of each one of us to espouse and give active effect to the values, motives and beliefs we state
here

NIIT IS PEOPLE

We have positive regard for each one of us. We will foster career-building by creating
opportunities that demand learning, thinking and innovation from each one of us. We expect
each of us to contribute to the process of organisation building and thus derive pride, loyalty and
emotional ownership.

We recognise the necessity of making mistakes and risk-taking when it contributes to the
learning, innovation and growth of each one of us.

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 NIIT IS QUALITY AND VALUE

Each of us will ensure that in any association with society, society benefits substantially more
than:

 What society gives to us

 What society would gain from any other similar association
We will meet any and every commitment made to society irrespective of any cost that may have
to be incurred. We will ensure our profitability, long-term growth and financial stability, through
the process of delivering the best, being seen as the best and being the best. We will be fair in all
our dealings and promote high standards of business ethics.

NIIT IS A MISSION

We will grow in the recognition and respect we command, through pioneering and leading in the
effective deployment of technology and know-how. We will seek to play a key-role in the
directions and deployment of technology and know-how for the benefit of mankind.

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 SERVICES PROVIDED BY NIIT TECHNOLOGIES

DIGITAL SERVICES

Digital technology solutions are transforming the world as customer expectations grow and
budgets tighten. Enterprises are adopting ‘Big Data’-driven decision models, customers are
receiving personalized product and service recommendations, and time-to-market continues to
shrink. Evolving technologies like augmented reality, virtual reality, artificial intelligence,
robotics, and data analytics are offering new revenue streams and distinct opportunities for richer
insights. NIIT Technologies partners with you in this transition to the digital world.

Digital services stack enables businesses to strategize, build, and leverage evolving technologies
and create market-ready solutions with radical benefits. Our vertical focus on Travel and
Transportation, Insurance, and Wealth Management, allows us to leverage our industry and
digital expertise to deliver effective and emotionally empathetic experiences to our clients.
Through our Digital E3 approach, we prioritize end user experience and build next-gen digital
solutions focused on select verticals to generate maximum value.

ROBOTIC PROCESS AUTOMATION

Robotics Process Automation (RPA) is maturing. It is the application of technology (software

robot) to interpret existing applications for processing transactions, triggering responses, and
interacting with other digital systems. To maximize the impact of RPA, organizations need cost-
effective solutions that are compliant, deliver work in a short span of time, and can cope with
volume fluctuations with speed, agility, and resilience. What sets off RPA technology from
conventional automation is its seamless nature and the speed at which the robots can be
configured.

NIIT Technologies’ RPA delivery framework enables organizations to create a fast, accurate,
cost-effective, and round-the-clock virtual workforce for various operations— leading to
operational excellence. We have proven experience in helping organizations successfully
implement and create an effective strategy for RPA deployment.

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 INFRASTRUCTURE AND MANAGEMENT SERVICES

NIIT Technologies provides data centre service, workplace as a service, IT operations

management, DevOps and Operations, Landscape management, Cloud Services, Cyber security.

BUSINESS PROCESS SERVICES

NIIT Technologies is a full-spectrum integrated Business Process Services (BPS) provider. We

have adopted a customer-centric approach to BPS. Whether it is a Unified solution-Process
excellence or an integrated IT-BPO solution, NIIT Technologies has developed a business model
that delivers a strong and strategic partnership. Our integrated service framework helps us re-
engineer processes, resulting in cost rationalization, productivity enhancement, and service
quality improvement for our clients in focus verticals such as Travel and Transportation,
Banking, Financial Services and Insurance, and Media from our delivery centers located in the
Americas, India, and the Philippines.

APPLICATION DEVELOPMENT MANAGEMENT

Today’s enterprises expect IT systems to provide an innovative edge to the business by

implementing unique and disruptive business outcomes. To remain competitive, the systems
should be capable of innovating at a faster pace and a lower cost. Digital innovation, customer
experience, distributed platforms, and the need for automation characterize the need in today’s
scenario.

NIIT Technologies brings in-depth experience in developing and managing enterprise systems of
various Fortune 1000 companies and offers scalable, end-to-end custom solutions. We have deep
expertise in:

 Offering Vertically Structured Managed Support Engagements

 Delivering Tailor-made Solutions
 Providing End-to-end Testing Services

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 Utilizing Global, Agile, Continuous Delivery and Lean Principles to Deliver Solutions Quickly
and with Least Wastage
The combination of methodologies, processes, culture, domain understanding, and solutions
together provide desired business outcomes with high operational efficiency and faster time-to-
market.

Our services under Application Development & Management include:

 Application Development Services to define, design, and build solutions that meet your business needs.
This includes Global Agile Services and Continuous Delivery Services.
 Application Management Services to deliver support services, resulting in higher service levels and
optimization using Lean principles. This includes Application Modernization Services.
 Value-added Independent Testing Solutions

TESTING SERVICES

NIIT Technologies understands the significance of reliability, high resilience, and predictability
of applications and products for enterprises, and their need for a business assurance partner.

NIIT Technologies Testing Services deliver high quality and efficient testing through proven
strategies of business process-centric testing streams, a common testing phase across applications
services tracks, continuous integration and validation of production ready scrum outputs across
DevOps and agile programs, and business outcome analytics.

They continuously improve testing efficiency and effectiveness by leveraging their domain,
frameworks, tools, and methodologies, thereby reducing time and effort spent on testing and
achieving the desired business outcomes.

GEOGRAPHICAL INFORMATION SERVICES

NIIT Technologies recognizes the power of geospatial technology and strongly believes that
Geographic Information System (GIS) benefits must permeate all industries and organizations,
enabling businesses across verticals to make informed, location-specific decisions. In an effort to

22
 turn this vision into reality, we have continually serviced the needs of global GIS markets
through our focused, innovative, and efficient services in all areas of spatial technology and
applications.

They globally serve the following industries with our quality products and committed services:

 Utilities
 Land Records
 Transportation

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 OPERATIONS OF NIIT TECHNOLOGIES

TRAVEL AND TRANSPORTATION SOFTWARE SOLUTIONS

NIIT Technologies, have built their reputation for delivering excellence to some of the world’s
leading airlines, airports, travel distribution, and surface transportation companies with strategic
IT initiatives, which impact both their top and bottom line.

They have focused offerings such as application development and maintenance, application
managed services, digital services, infrastructure management services, business process
services, and testing services.

Their domain depth is augmented by innovative products and frameworks (for Revenue
Accounting, In-flight Catering, Cargo Ground Handling), which enable them to address industry-
specific pain points for clients.

They offer solutions and services to meet the needs of following industry segments:

 Airlines
 Airports
 Travel Distribution
 Surface transport

INSURANCE SOFTWARE SOLUTIONS

NIIT Technologies, with deep and enduring relationships with global insurance players across
geographies and over two decades of experience in providing a range of technology services,
offers an entire suite of IT, BPM, and digital services that caters to the evolving needs of the
insurance industry.

They help insurers modernize legacy systems, leverage digital legacy integration services,
reengineer business processes to enhance business agility, improve operational efficiency, reduce
costs, and improve margins, thus injecting new efficiencies into their systems, helping them
monetize new channels, and preparing them for changing business imperatives.

24
MANUFACTURING AND DISTRIBUTION

Manufacturing companies are evaluated based on their resilience in the industry. This means
greater emphasis on business efficiencies, but given the labor-intensive nature of the industry,
efficiencies based on technology alone are insufficient. A strategy that balances global
technology with local innovation is crucial for growth. Nobody understands this better than NIIT
Technologies. With their experience in understanding both technological and cultural nuances,
theye have helped their global clientele make sound decisions about the deployment of
automated, transparent, and integrated information management systems across their value chain.

At NIIT Technologies, they provide focused offerings, such as application development and
maintenance, application managed services, digital services, infrastructure management services,
mobility, and testing services.

BANKING AND FINANCIAL SERVICES

NIIT Technologies can help banks and financial service firms adopt this new digital operating
model, along with its services, solutions, and alliances. With the right blend of industry and
technology expertise, they help your business transform faster while remaining profitable.

MEDIA

NIIT Technologies provides media companies with comprehensive, media-specific business and
IT solutions consulting.

NIIT Technologies has broad experience with both publishing (newspapers, magazines, and
digital services) and broadcasting. They deliver front- and back-office solutions, enhancing
competitiveness across the value chain of their operations. NIIT Technologies will help us
increase operational efficiency, stabilize costs, and increase profits.

25
 CORPORATE SOCIAL RESPONSIBILITY

CSR engagement of NIIT Tech for employees is focused on four areas: education, employability,
infrastructure enhancement, and local initiatives. The company supports NIIT University, a non-
profit institution, with a view to providing quality education for meritorious students. The
primary objective of the University is to promote learning and knowledge, and to improve the
quality of higher education around research, technology, and sustainability. NIIT Technologies
also works closely with institutions like NIIT Foundation, Noida Deaf Society, and other
partners to scale CSR initiatives.

NIITians are encouraged to volunteer with various NGOs affiliated to the NIIT Foundation to
work with underprivileged sections of society.

CSR Leave

NIIT Technologies supports and encourages NIITians who participate and contribute to social
causes by providing them four days of paid CSR leave so they can freely devote their time and
effort to supporting NGOs of their choice.

I-give Scheme

This platform allows NIITians to volunteer and financially support various initiatives for
marginalized and underprivileged sections of the society. For example, NIITians have been
actively involved in supporting the rehabilitation of people affected by natural disasters like the
Chennai and Jammu and Kashmir floods. NIITians have also generously volunteered to teach
students in the government schools and work with youth at various slum clusters to make them
employment-ready.

Shiksha

In collaboration with NIIT Foundation, NIIT Technologies has recently launched a CSR
initiative called “Shiksha,” a Career Development Centre at Dankaur village in Greater Noida.
Shiksha intends to impart education, employability training, and digital literacy to the youth of

26
Dankaur and nearby villages. It offers industry-specific courses including Showroom Retail,
Food & Beverages, Data Entry, and BPO. Soon it will introduce courses like Basics of IT,
Advanced IT, Social Networking and English Foundation.

27
 AWARDS AND RECOGNITIONS

Awards and accolades have been an important part of the NIIT Technologies success story. The
company has been recognized in several important ways at the national and global levels, related
to the company's industry performance, its leadership in the area of outsourcing, its headway in
specific industry verticals, and its robust HR practices.

Key Milestones
FY'18
 Conferred with Aegis Graham Bell Award for “Innovation in Cloud” category
 Esri India won Aegis Graham Bell Award for “Innovative Enterprise Solutions” category
 Esri India recognized as ‘Best Smart Cities Solution Provider in GIS’ at the ET Now CSR Global
Leadership Awards
 Won EE Employee Engagement award in UK
 Conferred with Partner of the Year for Quality by Aflac ,Leader in voluntary insurance sales at the
worksite in US and leading provider of medical and cancer insurance and insures 1 in 4 households in
Japan.
 Felicitated with International Airport Review Award in Terminal Operations
 Won HRO Today award for Excellence in Rewards & Benefits
 Conferred with Asia Pacific HRM Congress awards for "Organization with innovative HR practices"
 Gold winner of the 2017 ITSMA Marketing Excellence Awards
 Received 'Automation Project of the Year' award from Global Sourcing Association - EU and India
 Felicitated with BW HR Excellence awards 2017 for Change Management
 NIIT Technologies Helps Companies to Enhance Ancillary Revenue and Customer Experience:ISG
Briefing Notes

FY'17
 Included in Vendor Landscape: Continuous Testing Services For Agile And DevOps
Environments, published report by Forrester Research
 Positioned as a ‘High Achiever’ within the NelsonHall Next Generation Application Outsourcing
NEAT Matrix

28
 NIIT Technologies business outcome-based engagement with one of its clients was featured as a
case study in a recent Gartner report “Adopt Agile Microsourcing for Innovation Projects to
Drive Digital Success”, 22 March 2017, DD Mishra
 Awarded ‘Dream Companies to work for’ for Talent Management by Times Ascent in
association with World HRD Congress
 Won Jury’s Choice Award for ‘Compensation Benefits Leadership’ under BennyAwards2017 by
World HRD Congress
 Conferred with ‘Best Employer Brand 2017’ for Best HR Strategy in line with Business, by the
Employer Branding Institute in association with World HRD Congress
 Conferred with the industry’s most prestigious League Awards- Total Rewards by People
matters for “Best Contribution in Holistic Recognition”
 Won HR Innovation Awards for ' Best contribution to Organization Culture ' and 'Best
Rewards & Recognition program' by HT Mint Connect and The Guild in association with
CNBC TV18
 ESRI India wins the Prestigious Indian Express IT Award for IT Innovation in Enterprise
 Won Aecus Innovation award for delivering ‘Uninterrupted Business and IT operations at
Multiple Airports during Unprecedented Crisis’ for Airports Authority of India (AAI)
 NIIT Technologies is Ahead of the Automation and Analytics Curve : ISG Briefing
Notes
 Ranked #5 in customer satisfaction amongst top 27 outsourcing service providers in the
UK by Whitelane and PA consulting Group
 Esri India conferred with Technoviti Award for Enterprise GIS platform for BFSI
 Identified as "Leader" in NelsonHall's NEAT vendor evaluation for Digital
Transformation Services
 Received Asia Outsourcing Excellence Awards for Operational Excellence & Quality and
BPO Innovation of the Year
 Recognized as top performing IT stock on Bloomberg Intelligence’s Global IT Services
Commercial Competitive Peers index
 Secured ‘Best Service Provider Award’ from DB Systel, subsidiary of German Railways
 HRO Today Services and Technology Awards for Excellence in Business Partnership in
US

29
 ‘RB Investor Communication’ award in the ‘Technology – Emerging Corporates’
category.

30
  Persistent Systems Ltd

Persistent Systems Ltd.was incorporated on 16 May 1990 as Persistent Systems Private Limited.
It was subsequently converted into a public Limited company on 17 September 2010 with the
name Persistent Systems Limited and a new certificate of incorporation was issued on 28
September 2007 from the RoC.

Shares in the company were listed on the National Stock Exchange of India in March 2010. The
operations of Nagpur-based Infospectrum India Private, an outsourced private development of
US company Infospectrum, were taken over by Persistent in February 2011.

Persistent Systems Ltd. build software that drives the business of our customers; enterprises
and software product companies with software at the core of their digital transformation

Purpose of Persistent Systems Ltd. focused on delivering the best in class innovative solutions to
its customers and partners.

TYPE PUBLIC COMPANY

INDUSTRY IT SERVICES

FOUNDED 1960
Dr. Anand Deshpande (Founder, Chairman
FOUNDER
and Managing Director)
HEADQUARTER PUNE, INDIA

AREA SERVED WORLD WIDE

 Dr. Anand Deshpande (Founder, Chairman
KEY PEOPLE
and Managing Director)
 Sudhir Kulkarni (President, Sales,
Technology Services)
 Atul Khadilkar (President, Delivery
Operations, Technology Services)
 Col. Jitendra Gokhale (President, IBM
Alliance)
REVENUE INR 30.34 billion (FY18)

NUMBER OF EMPLOYEE 9000+ (Q1FY19)

31
WEBSITE www.persistent.com

Core purpose of Persistent Systems Ltd.

To be a well-respect technology company focused on delivering best in class innovative

solutions to its customers and partners.

Missions and Core Values of Persistent Systems Ltd are:

 We are a technology-driven company.

 We are committed to the highest standards of ethics and integrity.
 Since the future of our company depends squarely on the knowledge, imagination, skills,
teamwork and integrity of our employees, we value these qualities most highly.
 We are committed to delivering value to our customers. We must do this through
innovation and by consistently improving efficiency.
 We are dedicated to Quality - quality of products, quality of service, quality of
relationships, quality of communications & quality of our promises.
 Profit is important to us. It enables us to achieve our mission and to contribute to the
society. However, profit is not the only reason we are in business.

32
 SERVICES PROVIDED BY PERSISTENT SYSTEMS Ltd.

BANKING FINANCIAL SERVICES AND INSURANCE – software driven responsiveness

Persistent teams are leveraging machine learning, blockchain technologies, next

generation user experiences, and our understanding of the domain to enable them in
their mission of being responsive while maintaining the right balance of innovation,
governance, and regulatory compliance.

HEALTH LIFE SCIENCES

Healthcare is in the midst of an enormous software driven transformation. Disruptive

innovations in health tech and life sciences are using data to be more precise and more
personalized, and also making communities or entire populations healthier.

Whether Persistent is partnering with a health and life tech innovator or a care
delivery system, they stay sharply focused on the software driven transformations in
Healthcare and Life Sciences.

SOFTWARE AND TECHNOLOGY

Technology companies are truly software driven – from product to their entire
business operations. Product development has become continuous by design.
Technology products and business models don’t stay current for long due to the rapid
pace of innovation in technology.

Persistent Systems Ltd. collaborate with the born-digital to the multi-generation

technology companies to build their software driven businesses.

33
 Partner of Persistent Systems Ltd

Persistent Systems Ltd and IBM team up with Mount Sinai for Health Hackathon. Other
partners of Persistent are :

Oracle, USAA, IBM, Amazon Web Service, Dell Boomi, FIDO Alliance, Data Stax, Google
Cloud Platform, Microsft, Outsystems etc.

News of Persistent Systems Ltd. are :

 Persistent Systems achieved three-peat to reclaim “ coding powerhouse of India” title

 Mobile technology crucial for improving doctor-patient engagement : Sudhir Kulkarni ,

Persistent Systems Ltd.

Collaboration and Acquisition:

2017: Persistent Systems Acquires PARX – Platinum Salesforce Consulting Partner in DACH
Market

2016: Persistent Systems Launches Specialized Engineering Services for IBM Watson
IoT Platform
2016: Persistent Systems and REACHNet to Demonstrate Innovative Research Specific
Informatics Infrastructure at HIMSS 2016 Conference
2016: Persistent acquires PRM Cloud Solutions – a salesforce consulting partner, engaged in
building digital experiences on Salesforce1 cloud platform.

2016: Persistent product arm Accelerite purchases Citrix' Products CloudPlatform (Based on
Apache Cloud Stack) and CloudPortal Business manager
2015: Persistent Systems completed the acquisition of the digital content management solutions
business of US-based Akumina.

34
 AWARDS AND RECOGNITIONS

 Persistent Systems amongst the leading players in ‘Zinnov Zones 2017 – Digital
Services’ Report

 Persistent Systems cited as a Leader among BPM Service Providers By The Forrester
Wave™: BPM Service Providers, Q4 2016 Report
 Persistent Systems amongst the leading players for Enterprise and Consumer Software in
‘Zinnov Zones 2017 – Product Engineering Services’ Report

 Persistent Systems recognized for IoT Technology competency in ‘Zinnov Zones 2017 –
IoT Technology Services’ Report

 Featured in Forbes India Magazine – With an eye on the cloud, Persistent Systems
continue to innovate
 Business Today Names Persistent Systems’ Dr. Anand Deshpande to India’s “Best CEOs
List”

 Beacon Award finalist recognition at the 2017 IBM Partnership Leadership Conference
in Las Vegas
 Winner for the Golden Peacock National Training Award for the year 2018
 Ranked amongst the 2018 training top 125 organizations
 Recognized fifth time in a row as the Best Corporate University at the 2017 TISS
LeapVault Awards

35
3. Analysis of 3Cs –

 Company : Persistent Systems Ltd.

 Product : Software Product engineering

 Distribution : Persistent Systems provides services globally

 Competitors : TCS, Infosys, Hexaware, Mindtree , NIIT.

 Customer : Indiana Office of Technology, John Hopkins, Visit Ops, Tata

Capital, News America Marketing etc.

36
4. Objectives of the project
I. To forecast next 3 years of Persistent Systems Ltd.
II. To make valuation of Persistent Systems Ltd.
III. To analyse the performance of Persistent Systems Ltd.

37
5. Methodology of the project:
→ This project is based on the secondary data collected from the Annual Report,
Transcripts of Persistent Systems Ltd available in the internet.
→ For forecasting different methods like CAGR, Trend Analysis, Average trend of
past three years, etc.
→ Assumptions has been taken based on the information , decisions , facts disclosed
in the Transcript of last 4 quarters and trend of historical data.
→ Valuation the company has been done by using Discounted Cash Flow model and
Net Asset Value.

38
6. Data Analysis, Observations and presentation of the issues
concerning the project work:

A. Statement of Profit and Loss:

 Revenue:

HISTORICAL: The main source of revenue of Persistent Systems Ltd is from Software
services. Though revenue from operation is growing constantly but the percentage of the
growth is fluctuating in nature. The growth rates of 2014, 2015, 2016, 2017 and 2018 are
28.9%, 13.3%, 22.3%, 24.5% and 5.4% respectively. The growth rate from 2017 to 2018
has decreased because in financial year 2017-18

Quarter-1 : Due to rupee appreciation, the revenue was INR 7,280 million with a growth
of 0.1% QOQ and 3.7% YOY.

Quarter -2: the revenue was Rs.7613 million with a growth of 4.6% QoQ due to the
acquisition of PARX . PARX is a European acquisition from a few quarters ago which
showed good growth in this quarter and has also shown a very healthy pipeline build out
for business in ensuing quarters

Quarter-3 : The revenue in rupee terms was Rs. 7,919 million with a growth of 4% QOQ
due growth in service revenue by (2.7%) and billing rate

Quarter-4: There is a negative growth in Q4, which is -5%.The overall performance for
this quarter was impacted by the de-growth in the IP led revenue
They expected more growth in digital business but it resulted in 30% growth
Some contracts also ended during the FY18, which impacted the growth of revenue as
well.
FORECASTED: From the transcript of quarter 4 , it is found that an audience asked a
question that whether they can expect a double digit growth or not?

39
Dr. Anand Deshpande, Chairman & Managing Director, Persistent Systems replied that
they do have a few new IPs that they have brought into the system. If they are able to do
extra growth on that, they are expecting on that. That should generate higher IP revenue.
He also added that they could have executed a lot better on many of the digital projects
that they started out, but they could have been doing much more on that .
Since, he did not say clearly that a double digit growth is expected in the next year but he
also stated that there will be growth in the revenue as they are going to execute some
projects which will generate revenue, so it is forecasted that the revenue from operation
will grow by 6.2% in 2019, 6.3% in 2020 and 6.4% in 2021.

Revenue from Operations

Series1

28.9%

24.5%
22.3%

13.3%

6.2% 6.3% 6.4%

5.4%

01-Jan-14 01-Jan-15 01-Jan-16 01-Jan-17 01-Jan-18 01-Jan-19 01-Jan-20 01-Jan-21

40
 Other Income:
The main component of other income is foreign exchange gain which is difficult to
calculate, so figure of last year is considered for the next three financial years .
Compounded annual growth rate (CAGR) is used for forecasting the interest income
financial assets carried at amortized cost under the head of other income to calculate the
annual growth rate of the interest income, as interest income depends upon market
volatility.
Other heads of other income are:
Dividend income from investments: It is difficult to predict the dividend income from
investment as nothing is mentioned where the investment is made.
Profit on sale of fixed assets (net) : It is difficult to predict the sales price of the asset,so
profit on sale of fixed asset is also difficult to predict.

 Employee benefit expenses:

Salaries, wages and bonus increased by Rs.570 million in 2018, by Rs.3824.1 million in
2017, by Rs. 2795 million in 2016.
It is the main constituent of employee benefit expenses.
Since, salaries, wages and bonus depend upon the growth of Revenue so I have
forecasted the employee benefit expense as % of revenue

 Other expenses:
This head includes-
Travelling and conveyance , Electricity expenses, Internet link expenses ,
Communication expenses , Recruitment expenses , Training and seminars , Royalty
expenses , Purchase of software licenses and support expenses , rent etc which are all
driven by the growth of revenue. So they are forecasted as percentage of revenue.
Provision for doubtful receivables is forecasted based on Trade receivables.
Repairs and maintenance is forecasted based on the percentage of net block of assets.
Provision for diminution in value of non-current investments is forecasted as a percentage
of non-current investment

41
 Cost of Professional: as nothing is disclosed in the financial report of the company
relating the cost of professional and the historical data are fluctuating in nature, so it is
forecasted as the average of last three years.

 Finance cost: As finance cost is the constituent of interest expenses and Loan schedule
is not provided in the Annual Report of the company, so the value of last year is
considered for future.

 Depreciation and Ammortization expenses:

Depreciation:

 Tangible Assets-

 Addition of tangible assets is forecasted based on revenue. As revenue will increase,

business will expand and addition of tangible assets will be required according to that.
 Depreciation is calculated in Straight line method

Ammortization:

 Goodwill: no amortization is charged on goodwill

 Intangible assets:
 Addition is based on revenue
Amortization is calculated on straight line method

42
  Tax expenses

Any company will try to reduce its tax expenses in order to earn more profit, so it is
assumed that the tax expenses of Persistent Systems will also go down by 1% in every
year.

 Operating profit margin

The operating profit margin of the company is ₹2629 million in 2013, ₹3422.86 million in 2014,
₹3899.72 million in 2015, ₹3726.46 million in 2016, ₹4129.23 million in 2017, ₹4292.61 million
in 2018 , ₹4,235.06 million in 2019, ₹3,064.42 million in 2020 and ₹1,012.83 million in 2021.
Though there is a growth in operating profit margin from 2013 to 2018 but the rate of growth is
declining. From 2019 the operating profit margin started decreases due to expiry of some
contracts and increase in expenses.

 Net profit for the year

Net profit of the company is ₹ 1,876.18 million in 2013, ₹ 2,500.04 million in 2014, ₹ 2,906.31
million in 2015 ₹2802 million in 2016 ₹ 3,251.26 million in 2017 ₹3230.88 million in 2018,
₹3187.56 million in 2019 ₹ 2,337.11 million in 2020 and ₹782.57 million in 2021.

B. Balance Sheet

 ASSETS

 Non-Current Assets

→ Property, Plant and Equipment :

Persistent Systems Ltd has land freehold, leasehold land, vehicle, building,
computers, office equipments, Plant and equipment, furniturefixtures, vehicles
and leasehold improvement as intangible fixed assets.

43
 Depreciation schedule is prepared for calculating depreciation of those items.
Depreciation is charged on straight line method as mentioned in the financial
reports of the company for future prediction.
Then net block is calculated for this head which is the difference of gross block
and accumulated depreciation.
Gross block is the summation of opening balance of the asset , addition of assets,
assets taken over on acquisition of entities, addition through business combination
and effect of foreign transaction, then disposal of assets is subtracted to ascertain
the gross block.

→ Capital work-in-progress : Since there is no information disclosed regarding to

the capital work-in-progress, so forecasting of next 3 years is done by taking the
average of last three years.

→ Goodwill : Since, no amortization is charged is charged on goodwill and there is

nothing mentioned relating to purchase or sale of goodwill , so it is kept same as
of the previous year.

→ Other Intangible assets :

Persistent Systems Ltd. has software, acquired contract right as other intangible
asset
. Ammortization schedule has been prepared for calculating the amortization
charged against the intangible assets and the net block of the intangible assets.

→ Intangible assets under development : Since no further information is given

relating to this item, last year’s data i.e. of FY 2018 is assumed to be the future
value for the next three years.

44
 Non-Current Financial Assets

→ Non-current Investments: Since nothing is mentioned about the future

investment, then we can predict the future investment based on revenue, or can be
kept as constant. Here, last year amount has been taken for projecting the value of
next three years.

→ Loans : Since there is no loan schedule available in the annual report to project
for the future , so amount of last year is taken for projecting the value of next
three years.

→ Deferred tax assets: Deferred tax assets is the difference of calculation of tax
payable according to the accounting principles and the tax payable according to
the Income Tax Act. This difference is difficult to predict , so value of last year is
taken for projecting the value of next three years.

→ Other non-current assets : The main constituent of the other non-current assets
is capital advancement, which is difficult to predict. So value of last year is taken
for projecting the value of next three years.

→ Other non-current Financial assets : The main constituent of other non-current

financial assets is non-current bank balance. The amount that the company will
deposit in the bank is difficult to predict as no information regarding that is
provided. So value of last year is taken for projecting the value of next three
years.

45
 Current Asset

→ Trade receivables :
For calculating the future trade receivables, trade receivable period has been
calculated, which is calculated as

( average of debtors/ revenue from operation)*365 days.

It is assumed that with increase in revenue , business will expand, so the number
of days of trade receivable may get over by 2 days every year. The trade
receivables period is assumed as 59.76 days in 2019, 61.76 days in 2020 and
63.76 days in 2021.

The future trade receivables is calculated as

trade receivables period*( operating revenue/ 365days)*2 – opening debtors

→ Other current financial assets :

Major component of other current financial assets is unbuild revenue, so other
current financial assets is forecasted as a percentage of revenue.

→ Other current assets :

Major component of other current assets is advances. As the revenue increases
business will expand, and amount of advances will also increase. So other current
assets is forecasted as percentage of revenue .

→ Investment

Since nothing is mentioned about the future investment, then we can predict the
future investment based on revenue, or can be kept as constant. Here, investment
is forecasted as the percentage of revenue.

46
 → Loan

Last year’s value has been taken for the projection of next three years, due
unavailability of information.

→ Cash and cash equivalent

Cash and cash equivalent has been forecasted based on the calculation made in
the cash flow statement to derive the closing cash balance.

 EQUITY AND LIABILITIES

 Equity share capital

The equity share capital of Persistent Systems Ltd. is ₹400 millions in 2013 and 2014,
₹800 million in 2015, 2016, 2017 and 2018. So it is assumed that ₹800 million will be the
equity share capital in the next three years i.e 2019 , 2020 and 2021 as there is no
information relating to the issue of bonus share in future.

 Other equity

Other equity of the company is ₹9783 million in 2013, ₹11823 million in 2014, ₹13255
million in 2015, ₹15778 million in 2016, ₹18193 million in 2017 and ₹20472 million in
2018. All other components of other equity remains the same, only profit of respected
forecasted years are added to find the value of other equity in the projected years 2019,
2020, 2021.

47
 Non-current liabilities

→ Borrowings

Borrowings of the company during the last 5 financial years 2013, 2014, 2015,
2016, 2017 and 2018 is very negligible and it is very difficult to predict the
company’s future borrowings as no such plans or information of future
borrowings is mentioned in any financial reports. So the value of last financial
year i.e 2018 is taken for projecting the future years.

→ Provisions

The main component of provision is long-service award. So provision is

forecasted based on employee benefit expenses as main.

→ Deferred tax liabilities

Deferred tax liabilities is the difference of calculation of tax payable according to

the Income Tax Act and the tax payable according to the accounting principles.
This difference is difficult to predict , so value of last year is taken for projecting
the value of next three years.

 Current liabilities
→ Trade payables

For calculating the future trade payables, trade payable period has been
calculated, which is calculated as

( average of creditors/ total expenses)*365 days.

48
 It is assumed that with increase in revenue , business will expand, so the number
of days of trade payable may get over by 2 days every year. So it is forecasted that
the trade payables period will be 21.3 days in 2019, 23.3 in 2020 and 25.3 days in
2021.
The future trade payables is calculated as

trade payables period*( total expenses/ 365days)*2 – opening creditors

So the trade payables is ₹1741 million in 2019, ₹2411 million in 2020 and ₹2685
million in 2021

→ Other financial liabilities

The main component of other financial liabilities is accrued employee liabilities.

So it is forecasted as a percentage of employee benefit expenses.

→ Other current liabilities

Main component of other current liabilities is unearned revenue. So other current

liabilities is forecasted based on the percentage of revenue.

→ Provision

The major component of provision is employee benefit, so the provision is

forecasted as the percentage of revenue.

49
C. Cash Flow Statement

Cash Flow Statement of Persistent Systems Ltd. has been prepared by linking all the
items of the three heads which are operating activities, investing activities and financing
activities from the Statement of Profit and Loss and Balance Sheet.

 Operating activities

In operating activities all non-cash expenses like depreciation and amortization expenses,
provision for doubtful debts, bad debts, advances written off, Provision for doubtful
deposits and advances, Provision for diminution in value of non-current investments,
Excess provision in respect of earlier years written back, Provision for doubtful deposits
written back expenses related to financing activities like finance cost, and expenses and
loss related to investing activities like loss on sale of fixed assets are added to profit
before tax and incomes and gain related to investing activities like gain on fair valuation
of mutual funds, profit on sale of investments, profit on sale of fixed assets and income
related to financing activities like dividend income are subtracted from profit before tax.
Net change in working capital is obtained by adjusting the changes in current assets and
current liabilities, i.e. increase in current liabilities is added and decrease in current
liabilities is subtracted, whereas increase in current assets is subtracted and decrease in
current assets is added.
Cash flow from operations is obtained by deducting the tax expenses from net change in
working capital, which is ₹3297.24 in 2013, ₹1291.77 in 2014, ₹1119.10 in 2015,
₹1594.62 in 2016, ₹2317.36 in 2017, ₹640.03 in 2018, ₹8075.66 in 2019, ₹3332.55 in
2020 and ₹2423.79 in 2021.

50
  Investment activities

In investment activities all the disposal of assets and profit on disposal of assets are added and
all the capital expenditures, impairment of goodwill and loss on sale of assets are deducted to
calculate the cash flow / (used in) from investment activities, which is ₹(801.61) million in 2013,
₹(927.52) million in 2014, ₹(1075) million in 2015, ₹(1582.53) million in 2016, ₹(2263.21)
million in 2017, ₹ 255.86 million in 2018, ₹(1037.82) million in 2019, ₹(1100.31) million in
2020 and ₹(1162.66) million in 2021.

 Financing activities

In the financing activities new equity raised is added and increase and decrease in
borrowings and provisions are adjusted to calculate the cash flow / (used in) from
financing activities, which is ₹31 million in 2014, ₹415.6 million in 2015, ₹10.6 million
in 2016, ₹16.5 million in 2017, ₹8.5 million in 2018, ₹3.7 million in 2019, ₹7.4 million in
2020 and ₹7.8 million in 2021.

51
 D. Ratio Analysis

 Ratio analysis of Persistent Systems Ltd.

 EBITDA Margin

EBITDA is a way to evaluate a company's performance without having to factor in financing

decisions, accounting decisions or tax environments. In turn, the EBITDA margin provides more
insight than a net income margin because the EBITDA margin minimizes the non-operating
effects that are unique to every company. This gives investors a way to focus on operating
profitability as a singular measure of performance. An EBITDA margin is a measurement of a
company's earnings before interest, taxes, depreciation, and amortization as a percentage of its
total revenue. The formula for EBITDA margin is:

EBITDA Margin = EBITDA/Total Revenue

EBITDA Margin
30%

25%

20%

15%

10%

5%

0%

EBITDA Margin

52
 EBIT Margin

EBIT Margin is the ratio of Earnings before Interest and Taxes to net revenue - earned. It
is a measure of a company's profitability on sales over a specific time period. This
indicator gives information on a company's earnings ability.

EBIT Margin = EBIT/ Total Revenue

EBIT Margin
25%

20%

15%

10%

5%

0%

EBIT Margin

53
 PBT Margin

The profit before tax margin is the ratio of a company's pre-tax earnings to its total sales.
The higher the pretax profit margin, the more profitable the company. The trend of the
pretax profit margin is as significant as the figure itself. It indicates the direction of the
company's profitability.

PBT margin = Profit before tax/ total revenue

PBT Margin
25%

20%

15%

10% PBT Margin

5%

0%

54
 PAT Margin

Profit after-tax margin is a financial performance ratio calculated by dividing net income
by net sales. A company's after-tax profit margin is significant because it shows how well
a company controls its costs. A high after-tax profit margin generally indicates that a
company runs efficiently, providing more value, in the form of profits, to shareholders.

PAT Margin = Profit after tax / total revenue

PAT Margin
16%
14%
12%
10%
8%
6%
PAT Margin
4%
2%
0%

55
 Revenue growth rate

It is the percentage increase or decrease of current revenue over its previous year.
Revenue growth rate = ((revenue of current year - revenue of previous year)/ revenue of
previous year) * 100

Revenue
0.3
0.25
0.2
0.15
0.1 Revenue
0.05
0

 Return on equity

The return on equity ratio or ROE is a profitability ratio that measures the ability of a
firm to generate profits from its shareholders investments in the company. In other words,
the return on equity ratio shows how much profit each rupee of common stockholders’
equity generates.
Return on equity = Net Income/ Shareholder’s equity

Return on Equity
0.25
0.2
0.15
0.1
0.05 Return on Equity
0

56
  Fixed asset turnover ratio

The fixed asset turnover ratio is an efficiency ratio that measures a company’s return on their
investment in property, plant, and equipment by comparing net sales with fixed assets. In other
words, it calculates how efficiently a company is a producing sales with its machines and
equipment. Investors and creditors use this formula to understand how well the company is
utilizing their equipment to generate sales.

Fixed asset turnover ratio = Net Saales/ Average of total fixed assets

Fixed Asset Turnover Ratio

6

2 Fixed Asset Turnover Ratio

57
 Debt to equity ratio

Debt/Equity (D/E) Ratio, calculated by dividing a company’s total liabilities by its

stockholders' equity, is a debt ratio used to measure a company's financial leverage. The
D/E ratio indicates how much debt a company is using to finance its assets relative to the
value of shareholders’ equity.

Debt/Equity Ratio = Total Liabilities / Shareholders' Equity

Debt/ Equity
0.003

0.003

0.002

0.002

0.001 Debt/ Equity

0.001

0.000

58
 Debt to EBITDA ratio

Debt/EBITDA is a measure of a company's ability to pay off its incurred debt. The ratio
gives the investor the approximate amount of time that would be needed to pay off all
debt, ignoring the factors of interest, taxes , depreciation and amortization.

Debt to EBITDA ratio = Debt/ EBITDA

Debt/ EBITDA
0.008
0.007
0.006
0.005
0.004
0.003
0.002 Debt/ EBITDA
0.001
0.000

59
  Ratio analysis among the competitors of Persistent Systems Ltd.

 Price earning ratio

The price-earnings ratio (P/E ratio) is the ratio for valuing a company that measures its current
share price relative to its per-share earnings. The price-earnings ratio is also sometimes known as
the price multiple or the earnings multiple. The price-earnings ratio indicates the amount an
investor can expect to invest in a company in order to receive one rupee of that company’s
earnings.

P/E ratio = Market Value per Share / Earnings per Share

Price earning ratio

100.00

80.00

60.00

40.00

20.00

0.00
Persistent NIIT Hexaware Mindtree
System Technologies

Price earning ratio

60
 Price to sales ratio

Price to sales ratio (PSR ratio) indicates how much investor paid for a share compared to
the sales a company generated per share. It measures the value placed on sales by
the market. A higher ratio means that the market is willing to pay for each rupee of
annual sales. In general, the lower the P/S, the better the value is. However, the value of
the ratio varies across industries.

Price to sales ratio = Price of share/ net sales

Price/Sales
0.0800
0.0700
0.0600
0.0500
0.0400
0.0300
0.0200
0.0100
0.0000
Persistent System NIIT Technologies Hexaware Mindtree

Price/Sales

61
 Enterprise value to EBIT ratio

EV / EBIT, is a measure of the cost of a stock which is more frequently valid for
comparisons across companies than the price to earnings ratio. Like the P/E ratio, the EV
/ EBITDA ratio is a measure of how expensive a stock is. It measures the price (in the
form of enterprise value) an investor pays for the benefit of the company's cash flow (in
the form of EBITDA).
Enterprise value to EBIT ratio = enterprise value/ EBIT

Enterprise value/EBIT
16.00
14.00
12.00
10.00
8.00
6.00
4.00
2.00
-
Persistent NIIT Hexaware Mindtree
System Technologies

Enterprise value/EBIT

62
E. Valuation

 Discounted Cash Flow Model

→ For making the valuation of Persistent Systems Ltd. discounted cash flow model
is prepared where depreciation and amortization expenses are added to net
operating profit after tax and changes in working capital and capital expenditure is
deducted from operating profit after tax to calculate the free flow of cash for the
next three years i.e. 2019, 2020 and 2021.
→ Then total present value of those three years have been calculated for which
weighted average cost of capital is calculated which acts as discounting rate.
→ Weighted Average cost is calculated as ((total equity* cost of equity)/ (total
equity+ total debt))+((total debt*cost of debt)/ (total equity+ total debt))
→ Cost equity is calculated as Risk free rate + Beta(Market return-Risk free rate)
→ Beta is calculated as (covariance of market index and daily price of company)/(
variance of market index)
→ Market return is taken as 7% as calculated by Prof. Aswath Damodaran
→ Risk free rate is taken as 7.9% which is the rate of 10-years old bond.
→ Terminal value is calculated as ((present value of last year*(1+long-term growth
rate))/(weighted average cost of capital- long-term growth rate))
→ Enterprise value is obtained (present value + cash – debt – minority interest)
→ Estimated Value per Share is calculated as (enterprise value/ number of shares)

 Net Asset Value based model

Valuation of Persistent Systems Ltd. can be done according to NAV method, which is
calculated as [(Total Assets – ( Total Liabilities- Total equities)) / Number of shares].

63
7. Findings and Recommendations for Company adoption and
implementation

After analyzing three statements i.e. Profit and Loss Statement, Balance Sheet and Cash
Flow Statement , Ratio analysis and using two different models of valuations it is found
that
→ Net profit of the company will decrease in future
→ Total non-current assets will increase with the increase in sales
→ Total current assets will also increase in the next 3 years
→ As there will be no issuance of bonus capital , so the equity share capital will
remains constant in the next three years
→ Overall there will be an increase in non-current liabilities and current liabilities
→ There will be an initial increase of Cash flow from operating activities which will
eventually decrease
→ Cash will be used in investment activities in the next 3 years
→ There will be generation of cash from financing activities in the next 3 years
→ It is found that the EBITDA margin ratio, EBIT margin ratio, PBT margin ratio,
PAT margin ratio will decrease in future
→ Growth rate of revenue will remain constant in the next 3 years
→ The ability of a firm to generate profits from its shareholders investments in the
Persistent Systems Ltd will decrease in the next 3 years
→ The efficiency of Persistent Systems Ltd to generate sales by using its fixed assets
will remain same initially but then it will fluctuate
→ Persistent Systems will use constant percentage of debt i.e. 1% of debt will be used
to finance the company in the next 3 years
→ The ability of Persistent Systems Ltd to pay off its incurred debt will increase in the
next three years

64
 → The amount an investor can expect to invest in a company in order to receive one
rupee of that company’s earnings is higher in Mindtree Ltd., then in Hexware and
then in NIIT . Investors of Persistent Systems Ltd will have the lowest expectation
from their company.
→ The value placed on sales by the market is better Hexaware then in NIIT
Technologies, then in Mindtree and then in Persistent Systems Ltd.
→ Persistent Systems Ltd has the most expensive stock price in compare to NIIT
Technologies, Mindtree and Hexaware.
→ According to the Net Asset Value approach the share price is Rs. 398.82
→ According to the DCF model, the share price is Rs. 752.1

8. Conclusion

Performance of Persistent Systems Ltd. is declining as there is decline in the growth rate of
revenue. Though the share price of Persistent Systems Ltd. is much higher but it will fall
eventually if the performance of Persistent remains same. So it is suggested not to invest in
the shares of Persistent Systems Ltd. as the current share price of Persistent Systems Ltd. is
around ₹800 but according to DCF Model of valuation the share price of Persistent should
be ₹ 752.21 and ₹ 398.82 according NAV Approach.

65
9. References
https://www.persistent.com

https://www.niit-tech.com/

https://en.wikipedia.org/wiki/IT_service_management

https://www.investopedia.com

https://www.nseindia.com/products/content/equities/equities/equities.htm

https://www.moneycontrol.com/india/stockpricequote/computers-
software/persistentsystems/PS15

https://www.ndtv.com/business/stock/niit-technologies-ltd_niittech

http://www.business-standard.com

66
 10. Annexure

PROFIT AND LOSS STATEMENT (HISTORICAL) in INR Million.

Particulars 31-Mar-13 31-Mar-14 31-Mar-15 31-Mar-16 31-Mar-17 31-Mar-18

INCOME

Revenue from operations 12,945 16,692 18,913 23,123 28,784 30,337

% of growth 28.9% 13.3% 22.3% 24.5% 5.4%
Other Income 286 310 938 773 958 1,218
Total Income 13,231 17,002 19,851 23,896 29,743 31,555

EXPENSES

Employee benefit expenses 7,188 9,090 11,114 14,068 18,008 18,316

Cost of professionals 536 906 1,090 1,587 1,818 3,181

69% 20% 46% 15% 75%

Finance cost 0.4 0.5 3.4 0.9 0.9 0.79

Depreciation and Ammortization
expenses 783 1,026 939 990 1,490 1,585

Other expenses 2,094 2,546 2,806 3,524 4,296 4,180

Total expenses 10,601 13,568 15,951 20,170 25,614 27,262

Profit before exceptional items and

tax 2,629.88 3,433.86 3,899.72 3,726.46 4,129.23 4,292.61
Operating profit margin 20.2% 19.6% 15.6% 13.9% 13.6%
Exceptional items 0.00 0.00 0.00 0.00 -114.11 0.00
Profit before tax 2,629.88 3,433.86 3,899.72 3,726.46 4,243.34 4,292.61
Tax expenses 753.70 933.82 993.41 923.92 992.08 1,061.73
TAX RATE 29% 27% 25% 25% 23% 25%
Net profit for the year ( C ) 1,876.18 2,500.04 2,906.31 2,802.54 3,251.26 3,230.88
% of growth 33% 16% -4% 16% -1%

67
 PROFIT AND LOSS STATEMENT (FORECASTED) in INR Million.

Particulars 31-Mar-19 31-Mar-20 31-Mar-21

INCOME

Revenue from operations 32,218 34,248 36,440

% of growth 6.2% 6.3% 6.4%
Other Income 1,273 1,342 1,342
Total Income 33,491 35,590 37,781

EXPENSES

Employee benefit expenses 19,092 19,952 20,865

Cost of professionals 4,613 6,691 9,705

45% 45% 45%

Finance cost 0.79 0.79 0.79

Depreciation and Ammortization
expenses 1,275 1,374 1,480

Other expenses 4,275 4,507 4,718

Total expenses 29,256 32,525 36,769

Profit before exceptional items and tax 4,235.06 3,064.42 1,012.83

Operating profit margin 12.6% 8.6% 2.7%
Exceptional items 0.00 0.00 0.00
Profit before tax 4,235.06 3,064.42 1,012.83
Tax expenses 1,047.50 727.31 230.26
TAX RATE 24% 23% 22%
Net profit for the year ( C ) 3,187.56 2,337.11 782.57
% of growth -1% -27% -67%

68
 BALANCE SHEET (HISTORICAL) in INR Million.

Particulars 31-Mar-13 31-Mar-14 31-Mar-15 31-Mar-16 31-Mar-17 31-Mar-18

ASSETS
Non-current assets

Property, Plant and Equipment 2,800 2,785 3,057 2,968 2,768 2,581

Capital work-in-progress 1,174 307 40 24 48 8

Goodwill - 23 24 78 76 77

Other Intangible assets 702 1,269 995 1,325 2,515 2,464

Intangible assets under
development - - - 242 241 45

Total non-current assets 4,677 4,385 4,116 4,637 5,649 5,174

Financial assets -

Investments 173 823 2,116 1,469 2,339 2,881

Loans 199 138 114 86 131 143

Other non-current Financial assets 870 922 37

Deferred tax assets (net) 190 261 315 129 306 642

Other non-current assets 524 459 13 649 72 92

Total non-current assets 5,763 6,066 6,675 7,840 9,421 8,969

Current assets
Financial assets

Investments 3,116 4,071 4,620 4,914 4,500 5,916

Trade receivables 2,451 3,028 3,586 4,275 4,754 4,847

Cash and cash equivalents 561 957 1,416 1,400 1,461 1,344

Other bank balances - 39 48 1,070

Loans 346 410 417 9 14 7

Other current financial assets - - 1,764 2,316 2,758

Current tax assets (net) - - 153 94 114

69
Other current assets 434 902 1,035 803 855 1,563

6,908 9,368 11,074 13,358 14,043 17,620

Total 12,671 15,434 17,749 21,199 23,464 26,589

EQUITY AND LIABILITIES

EQUITY

Equity share capital 400 400 800 800 800 800

Other equity 9,783 11,823 13,255 15,778 18,193 20,472

Total Equity 10,183 12,223 14,055 16,578 18,993 21,272

LIABILITIES -

Non- current liabilities -

Financial liabilities -

Borrowings 14 32 25 27 22 17

Deferred payment liabilities 559 301 1 - 20 -

Provisions 80 93 116 124 146 160

Deferred tax liabilities (net) - 1 3 - 111 270

653 426 145 151 298 447

Current liabilities -

Financial liabilities -
Trade payables(dues of micro and
small enterprises 319 434 529 1,599 1,209 1,673

Deferred payment liabilities - - - 4 1 -

Other financial liabilities - - - 535 453 396

Other current liabilities 468 1,140 1,265 1,108 1,119 1,201

Provisions 1,048 1,211 1,755 1,224 1,391 1,599

1,835 2,785 3,549 4,469 4,173 4,870

TOTAL 12,671 15,434 17,749 21,199 23,464 26,589

70
 BALANCE SHEET (FORECASTED) in INR Million.

Particulars 31-Mar-19 31-Mar-20 31-Mar-21

ASSETS
Non-current assets
Property, Plant and
Equipment 1,917 1,229 516

Capital work-in-progress 8 8 8
Goodwill 77 77 77

Other Intangible assets 4,277 5,260 6,270

Intangible assets under
development 45 45 45

Total non-current assets 6,322 6,618 6,915

Financial assets -

Investments 2,881 2,881 2,881

Loans 143 143 143
Other non-current Financial
assets 37 37 37

Deferred tax assets (net) 642 642 642

Other non-current assets 92 92 92

Total non-current assets 10,117 10,413 10,710

Current assets
Financial assets

Investments 2,897 3,080 3,277

Trade receivables 5,702 5,887 6,843

Cash and cash equivalents 9,455 11,695 12,964

Other bank balances
Loans 7 7 7

71
 Other current financial assets 1,010 1,074 1,142

Current tax assets (net) 114 114 114

Other current assets 1,333 1,417 1,507

20,518 23,273 25,854

Total 30,635 33,686 36,564

EQUITY AND
LIABILITIES
EQUITY
Equity share capital 800 800 800

Other equity 22,709 24,096 23,929

Total Equity 23,509 24,896 24,729

LIABILITIES

Non- current liabilities

Financial liabilities
Borrowings 17 17 17

Deferred payment liabilities - - 0.00

Provisions 163 171 179

Deferred tax liabilities (net) 270 270 270

450 458 466
Current liabilities
Financial liabilities

Trade payables(dues of micro

and small enterprises 1,741 2,411 2,685

Deferred payment liabilities - - 0

Other financial liabilities 241 252 263

Other current liabilities 1,357 1,376 1,481

Provisions 1,601 1,673 1,750

72
 5,183 6,475 6,179
TOTAL 29,143 31,829 31,373

(1,493) (1,857) (5,191)

CASH FLOW STATEMENT (HISTORICAL) in INR Million.

PARTICULARS 31-Mar-13 31-Mar-14 31-Mar-15 31-Mar-16 31-Mar-17 31-Mar-18

CASH FLOW FROM OPERATING
ACTIVITIES
Profit before tax 2,629.88 3,433.86 3,899.72 3,726.46 4,243.34 4,292.61
Add: Depreciation & amortization 782.9 1026.0 938.5 990.1 1490.2 1584.9
Add: finance cost 0.36 0.53 3.37 0.92 0.91 0.79
add; prov for doubtful debts 93.10 28.37 -55.77 -196.10 25.64 117.88
add: Bad debts 30.59 46.27 99.27 205.01 114.56 183.97

add: advances written off 0 3.9 0 29.55 0 0

Provision for doubtful deposits and
advances 27.73 0.45 2.18 0.06 0.00 0.00

Provision for diminution in value of non

current investments 0.0 0.1 0.0 0.0 8.4 27.0
(Gain)/ loss on fair valuation of mutual
funds 0 0 0 -14.16 190.61 -18.92
(Profit) on sale of investments (net) -13.09 -54.50 -84.72 -224.41 -94.14 -186.84
(Profit) on sale of fixed assets (net) -3.89 0.00 -3.05 -9.29 -1.68 -2.40
Dividend Income -155.23 -149.51 -233.26 -226.50 -188.98 -171.25
Excess provision in respect of earlier years
written back -2.47 -2.22 -5.73 -0.01 -3.00 -18.19
Provision for doubtful deposits written
back (net) 0.00 -1.11 0.00 0.00 0.00 -23.76
Interest Income -92.60 -91.47 -116.52 -148.43 -144.69 -161.54
loss on sale of fixed assets 0.00 3.32 0.00 0.00 0.00 0.00

3,297.24 4,243.89 4,444.02 4,133.23 5,641.13 5,624.18

Net change in Working Capital
Add: Increase/(decrease)Trade
payables(dues of micro and small
enterprises 114.7 95.0 1070.6 -390.0 463.7

73
Add: Increase/(decrease) Other financial
liabilities 0.0 0.0 534.6 -81.9 -56.4
Add: Increase/(decrease)Other current
liabilities 671.9 124.6 -157.2 11.2 82.3
Add: Increase/(decrease)Provisions 162.84 544.36 -531.6 167.44 208.42
(Increase)/Decrease Investments -955.2 -548.4 -294.6 414.7 -1416.7
(Increase)/Decrease Trade receivables -651.79 -601.09 -698.64 -618.54 -395.42
(Increase)/Decrease Loans -64.45 -6.72 407.67 -4.88 7.37
(Increase)/Decrease Other current financial
assets 0.0 0.0 -1764.0 -552.1 -442.2
(Increase)/Decrease Current tax assets
(net) 0 0 0 0 0 0
(Increase)/Decrease Other current assets -467.96 -133.15 232.08 -52.07 -708.02

Working capital (balance adjusted) -828.36 -1806.12 -260.53 -1284.34 -1645.93

Net Change in Working Capital 0.0 -2018.3 -2331.5 -1461.6 -2390.4 -3902.9
Tax Expenses -933.82 -993.41 -1,077.04 -933.38 -1,081.30
Cash Flow from Operations 3,297.24 1,291.77 1,119.10 1,594.62 2,317.36 640.03

Cash Flow from Investment Activities

less: Capex (1,066.60) (1,425.32) (908.77) (1,013.26) (2,565.74) (819.61)

add: disposal of assets 0.18 5.98 0.22 2.65 4.99 0.72
less: intangible assets under development 0 0 -241.63 0.5 196.41
Goodwill -22.94 -0.97 -53.96 1.64 -0.38
Capital work-in-progress 867.09 267.36 16.4 -24.83 40.76
( Increase)/decrease in investments -650.49 -1292.31 646.25 -870.15 -541.6
(Gain)/ loss on fair valuation of mutual
funds 0 0 0 -14.16 190.61 -18.92
(Profit) on sale of investments (net) 13.09 54.50 84.72 224.41 94.14 186.84
(Profit) on sale of fixed assets (net) 3.89 0.00 3.05 9.29 1.68 2.40
Dividend income from investments 155.23 149.51 233.26 226.50 188.98 171.25
( Increase)/ decrease in loans -61.51 -24.13 -27.61 45.26 11.24
(increase)/ decrease in other non-current
financial assets 0.0 0.0 -870.1 -52.3 884.9
Interest Income 92.60 91.47 116.52 148.43 144.69 161.54
(increase)/ decrease in Other non-current
assets 64.19 446.05 -635.74 577.28 -19.72

Cash Flow from Investment Activities (801.61) (927.52) (1,075.00) (1,582.53) (2,263.21) 255.86

74
Cash Flow from Financing Activities
add: New equity raised 0 400 0 0 0
Borrowings 17.67 -7.15 2.19 -5.2 -5.16

Provisions 13.36 22.75 8.43 21.73 13.61

Cash Flow from Financing Activities 0.0 31.0 415.6 10.6 16.5 8.5

NET CASH FLOW 2,495.63 395.28 459.70 22.71 70.68 904.34

Cash Balance
Opening balance 561.26 956.54 1416.24 1438.95 1509.63

Net cash Flow 395.28 459.70 22.71 70.68 904.34

Closing Balance 956.54 1,416.24 1,438.95 1,509.63 2,413.97

CASH FLOW STATEMENT (FORECASTED) in INR Million.

PARTICULARS 31-Mar-19 31-Mar-20 31-Mar-21

CASH FLOW FROM OPERATING

ACTIVITIES
Profit before tax 4,235.06 3,064.42 782.57

Add: Depreciation & amortization 1274.7 1374.1 1479.7

Add: finance cost 0.79 0.79 0.79

add; prov for doubtful debts 138.67 143.17 166.42

add: Bad debts 183.97 183.97 183.97
add: advances written off 0 0 0
Provision for doubtful deposits and advances 0.00 0.00 0.00
Provision for diminution in value of non
current investments 12.4 12.4 12.4
(Gain)/ loss on fair valuation of mutual funds -18.92 -18.92 538.74
(Profit) on sale of investments (net) -186.84 -186.84 0.01
(Profit) on sale of fixed assets (net) -2.40 -2.40 25.51
Dividend Income -174.08 -176.95 0.00
Excess provision in respect of earlier years
written back -18.19 -18.19 138.64

75
Provision for doubtful deposits written back
(net) -23.76 -23.76 0.00
Interest Income -188.69 -222.30 415.86
loss on sale of fixed assets 0.00 0.00 105.57

5,232.73 4,129.50 3,850.24

Net change in Working Capital
Add: Increase/(decrease)Trade payables(dues
of micro and small enterprises 67.7 670.3 274.4

Add: Increase/(decrease) Other financial

liabilities -155.2 10.9 11.5
Add: Increase/(decrease)Other current
liabilities 155.9 19.5 104.2
Add: Increase/(decrease)Provisions 1.393971748 72.13856163 76.51841732
(Increase)/Decrease Investments 3019.0 -182.5 -197.1
(Increase)/Decrease Trade receivables -1177.42 -512.30 -1306.29
(Increase)/Decrease Loans 0 0 0
(Increase)/Decrease Other current financial
assets 1748.2 -63.6 -68.7
(Increase)/Decrease Current tax assets (net) 0 0 0
(Increase)/Decrease Other current assets 230.83 -83.95 -90.66

Working capital (balance adjusted)

Net Change in Working Capital 3890.4 -69.6 -1196.2

Tax Expenses -1,047.50 -727.31 -230.26
Cash Flow from Operations 8,075.66 3,332.55 2,423.79

Cash Flow from Investment Activities

less: Capex (1,570.91) (1,669.87) (1,776.74)
add: disposal of assets 0.00 0.00 0.00
less: intangible assets under development 0 0 0
Goodwill 0 0 0
Capital work-in-progress 0 0 0
( Increase)/decrease in investments 0 0 0
(Gain)/ loss on fair valuation of mutual funds -18.92 -18.92 -18.92
(Profit) on sale of investments (net) 186.84 186.84 186.84
(Profit) on sale of fixed assets (net) 2.40 2.40 2.40
Dividend income from investments 174.08 176.95 179.87

76
( Increase)/ decrease in loans 0 0 0
(increase)/ decrease in other non-current
financial assets 0.0 0.0 0.0
Interest Income 188.69 222.30 263.89
(increase)/ decrease in Other non-current
assets 0 0 0
Cash Flow from Investment Activities (1,037.82) (1,100.31) (1,162.66)

Cash Flow from Financing Activities

add: New equity raised 0 0 0
Borrowings 0 0 0

Provisions 3.68 7.36 7.81

Cash Flow from Financing Activities 3.7 7.4 7.8

NET CASH FLOW 7,041.53 2,239.61 1,268.94

Cash Balance
Opening balance 2413.97 9,455.50 11,695.11
Net cash Flow 7,041.53 2,239.61 1,268.94
Closing Balance 9,455.50 11,695.11 12,964.05

77
 VALUATION in INR Million.

DCF Model
FY19 FY20 FY21
EBIT 4,235.06 3,064.42 1,012.83
Tax rate 0.24 0.23 0.22
Net Operating Profit After Tax 3,229.92 2,367.76 792.70
Depreciation&Ammortization 1,274.69 1,374.08 1,479.73
Changes in working capital 3,890.43 -69.64 -1,196.20
Capital Expenditure 1,570.91 1,669.87 1,776.74
FCF -956.73 2,141.60 1,691.88

PV of
Terminal Growth
Cal. Year year Discount FCF PV of Cash Flows terminal
value Rate
value
FY19 1 0.93 -956.73 -889.37
FY20 2 0.86 2,141.60 1850.66
FY21 3 0.80 1,691.88 1359.10 69022.6 55446.27 5% Long-term

54% Short term

Present Value 57,766.66

Cash 2413.97
Debt 16.55
Minority Interest 0
Enterprise Value 60164.08
No. Of Shares Outstanding 80
Value per share 752.1

78
 Cost of Equity :
(India 10 year
Risk Free Rate (Rf) 7.90% bond rate)
Beta 0.511836656
(Aswath
Market return (Rm) 7% Damodaran)

Cost of debt 3.59%

EXPECTED RETURN
(Ke) 7.578%
Risk free rate +
Beta(Market return-
Risk free rate)
Rf+B(Rm-Rf)

WACC (K) 7.574%

NAV APPROACH
Total Assets 26,588.62

Total Liabilities 26,588.62

- Shareholder funds 21,271.99
and Reserves & Surplus
NAV 31,905.25

No. of Outstanding Shares 80.00

Share Price 398.82

79
 RATIO ANALYSIS

Particulars 31-Mar-13 31-Mar-14 31-Mar-15 31-Mar-16 31-Mar-17 31-Mar-18 31-Mar-19 31-Mar-20 31-Mar-21

Profitability
Ratios
EBITDA Margin 26% 26% 24% 20% 19% 19% 16% 12% 7%
EBIT Margin 20% 20% 20% 16% 14% 14% 13% 9% 3%
PBT Margin 20% 20% 20% 16% 14% 14% 13% 9% 3%
PAT Margin 14% 15% 15% 12% 11% 10% 10% 7% 2%
Revenue 28% 17% 20% 24% 6% 6% 6% 6%
Return on Equity 0.18 0.20 0.21 0.17 0.17 0.15 0.14 0.09 0.03
Fixed Asset Turnover Ratio 3.684 4.449 5.284 5.597 5.606 5.605 5.293 5.385
Debt/ Equity 0.001 0.003 0.002 0.002 0.001 0.001 0.001 0.001 0.001
Debt/ EBITDA 0.004 0.007 0.005 0.006 0.004 0.003 0.003 0.004 0.007

Persistent
System NIIT Technologies Hexaware Mindtree
EPS 40.39 45.6 16.79 11.12
Book value of share (as
on 2nd July, 11:15a.m) 255.52 216.3 49.47 171.93

market price (as on 3rd

July, 3:30p.m 808.00 1113.05 468.45 1006.7
Revenue 12945.12 29,914 39420 14640
Share price
Enterprise value 60164.08 10129 14767 16928
EBIT 4293.40 4036 6403.84 2563

Price earning ratio 20.01 24.41 27.90 90.53

Price/Sales 0.0624 0.0372 0.0119 0.0688

Enterprise value/EBIT 14.01 2.51 2.31 6.60

80