In a business update to the stock exchange, Persistent Systems said the dollar revenue in the first quarter could be marginally lower as compared to the previous quarter. The IT company attributed it to weakness in its current product engineering business, coupled with seasonal variability associated with its intellectual property business.
Persistent Systems also indicated potential margin pressure in the first quarter due to higher visa costs.
"We have applied for a significantly higher number of H1B visas in this quarter as compared to the corresponding quarter of the last year to cater to the increasing demand for onshore work from the enterprise customers. These factors could exert a pressure on our margins for this quarter," Persistent Systems said in a statement to the BSE.
Analysts expect a 200 bps margin decline for Persistent in the first-quarter. In the fourth quarter of the previous fiscal, Persistent had reported an EBITDA margin of 20.2 per cent. Despite the warning of a muted quarter from Persistent, TS Harihar, Chief Executive and Founder of HRBV Client Solutions Private, has a positive stance on IT stocks.
Mr Harihar said that Persistent Systems' larger rivals like TCS and Infosys are unlikely get impacted in the first quarter. The cross-currency impact on earnings of IT companies has faded, he added.
However, he sees some impact on Wipro due to its exposure to telecom and energy verticals.
This is the second consecutive quarter in which the management of Persistent had warned about its quarterly earnings. In March this year, Persistent Systems had warned that its revenues in dollar terms are likely to be muted for fourth quarter of FY15.
In the fourth-quarter, the mid-sized IT company's fourth quarter earnings came in line with its management's pre-result update.
Persistent Systems' revenue in the quarter ended March 31, 2015, inched higher to Rs 497.4 crore against Rs 494.6 crore in the December quarter. Its Q4 profit rose to Rs 76 crore against Rs 74.4 crore quarter on quarter. The closely tracked dollar revenue in Q4 inched higher at $80 million against $79.52 million quarter-on quarter.
At 10:51 a.m., shares of Persistent Systems were down 8 per cent as compared to a 0.25 per cent gain in Sensex.
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