Persistent loses, persistently

Persistent Systems is currently the top loser on the BSE, down over 10% at Rs.647. Volumes are huge at 73,000 shares traded today alone compared to two-week average of 7421 shares.

The stock is down after it once again issued a muted outlook for Q1FY16. The company issued a Press Release yesterday after market hours, saying that it expects a fall in its topline for the quarter and also a decline in margins.

In company stated in the Press Release, “The weakness in our current engineering business coupled with the quarterly variability associated with our IP business, could result in marginally lower USD revenue for this quarter as compared to the previous quarter.” The IP business was weak in Q4FY15 too, so the same trend persists.

After the issue of this statement, brokerage houses expect the margins to fall by 100 bps and stock price to correct by around 10%.