CLSA says these 2 stocks are potential multibagger stocks- Find out why – Market News

Global brokerage firm CLSA has identified Zomato and Persistent Systems as potential multibagger stocks, indicating a significant growth over the next few years. While Persistent Systems is expected to more than double or even triple in five years, CLSA sees Zomato’s Quick Commerce arm, Blinkit, as a key long-term growth driver.

Zomato: Blinkit’s growth to drive long-term value

CLSA also included Zomato in its multibagger list, seeing Quick Commerce as one of the best multi-year growth stories in the Indian consumer market.

Salesperson Damian Dwerryhouse noted, “We see Quick Commerce as one, if not the best, multi-year growth story in Indian consumer and arguably the market.”

While Zomato’s next two quarters could be impacted by store expansions, Blinkit is expected to turn profitable by the September quarter and grow strongly from there.

According to the CLSA report, “If India is considering the structural growth opportunity the market believes, consumption is a key theme, and Quick Commerce is still in its infancy. Surely, the current pullback in Zomato is an opportunity to re-appraise the longer-term investment opportunity vs weak quarterly results.”

The online food tech major, Zomato’s share price tells a different story. It surged nearly 4% in the last month but remains 14% lower over six months. However, the food delivery giant has delivered a 36% gain over the past year.

Persistent Systems: Aiming for $30 billion market cap by FY31

According to the CLSA report, Persistent Systems is on a strong growth trajectory, currently generating $1.43 billion in revenue with an EBIT margin of approximately 15%. The company has set an goal of reaching $ 5 billion in revenue by FY31, with further margin expansion.

Analyst Sumeet Jain in the CLSA report highlighted the stock’s potential, stating, “I believe Persistent Systems (PSYS IN) can easily more than double or probably 3X in the next five years. Given such stocks can trade at 5-6X EV/Sales (currently at 6.5X), we believe PSYS can be a $30Bn market cap stock by FY31.”

CLSA has also increased its FY25-27 EPS estimates by 1% to 2%, citing higher EBIT margins and a lower tax rate assumption. The brokerage reiterated its “O-PF” rating and revised the 12 month target price to Rs 9,267 from Rs 9,096, based on a 2.5 times PEG multiple, projecting revenue, EBIT, and EPS CAGRs of 21%, 28%, and 27%, respectively.

Persistent Systems share price has seen a rollercoaster ride in the stock market over the past year. While the stock is down nearly 11% in the last month, it has gained 13% in the past six months and surged 34% over the past year.

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