Hold Persistent Systems Ltd For Target Rs. 5,585 by Axis Securities Ltd
In-line Performance; Superior Execution
Est. Vs. Actual for Q1FY26: Revenue – INLINE ; EBIT Margin – INLINE; PAT – BEAT
Recommendation Rationale
• Growth Outlook: Despite the ongoing macro challenges leading to weak discretionary spending
• and delayed decision-making, the management remains optimistic on the continuation of the company's growth momentum.
• Deal wins/pipeline: The Total Contract Value (TCV) stood at $521 Mn $385 Mn in Annual Contract Value (ACV) as on Jun’25. The company is confident in its pipeline of larger deals with a healthy executable order book.
• AI Implementation: Persistent Systems has restructured its AI strategy around four key pillars, such as 1) AI for Technology, 2) AI for business, 3) Acquisitions and 4) Improving internal productivity
Sector Outlook:
Cautiously optimistic Company Outlook & Guidance: The management remains confident in achieving its \$2 Bn revenue target by FY27, supported by a combination of organic growth, core operational efficiencies, and an active acquisition strategy. For its longer-term aspiration of reaching \$5 Bn revenue by FY31, the company plans to strategically expand into the manufacturing and retail verticals, thereby diversifying its growth engines and broadening its addressable mark
Current Valuation: 51x FY27E P/E
Current TP: 6240/share
Recommendation: The management is focusing on new areas within Healthcare services and BFSI, with an aim to deepen its presence across multiple sub-segments within these verticals. We resume our coverage with a BUY rating on the stock
Financial performance
In Q1FY26, Persistent Systems reported revenue of Rs 3,334 Cr vs Rs 2,737 Cr in Q1FY25, registering a growth of 21.8% YoY and 2.8% QoQ. In CC terms, revenue grew by 19% YoY and 3.3% QoQ. EBIT stood at Rs 518 Cr vs Rs 384 Cr in Q1FY25, up 34.8% YoY and 2.5% QoQ, driven by strong topline growth. Net income came in at Rs 425 Cr vs Rs 306 Cr in Q1FY25, reflecting a growth of 38.7% YoY and 7.4% QoQ, aided by higher other income. However, attrition rose by 200 bps YoY to 13.9% from 11.9% in Q1FY25. The company reported Total Contract Value (TCV) of \$521 Mn, with \$385 Mn in Annual Contract Value (ACV) as of Jun’25.
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SEBI Registration number is INZ000161633
