Motilal Oswal Recommends Buying Persistent Systems, Sets Price Target of Rs 6200

Persistent Systems Reports Strong 4QFY26 Results, Outlook Revised

Persistent Systems (PSYS) has released its fourth quarter results for the fiscal year 2026, reporting revenue of USD436 million. This figure represents a 3.2% quarter-over-quarter increase in USD terms and a 3.4% increase in constant currency (CC) terms, slightly below the estimated growth rate of 3.5%.

The company's adjusted earnings before interest and taxes (EBIT) margin stood at 16.3%, below the estimated 16.6%. However, adjusted EBIT grew 16.3% quarter-over-quarter and 16.2% year-over-year to INR6.6 billion. Adjusted profit after tax (PAT) came in at INR5.3 billion, up 4.5% quarter-over-quarter and 33.7% year-over-year.

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In terms of full-year performance, Persistent Systems reported revenue, adjusted EBIT, and adjusted PAT growth of 23.5%, 36.6%, and 3.79%, respectively, in INR terms. The company's free cash flow stood at 94.7% of net profit for the fiscal year 2026. The return on equity (RoE) for FY26 came in at 27.3%, an improvement from 24.8%, 25.6%, and 25.9% in the previous three fiscal years.

The company's total contract value (TCV) for the trailing 12 months stood at USD601 million, a 10.8% quarter-over-quarter decline but a 16.1% year-over-year increase. The book-to-bill ratio was 1.4x.

Based on the company's performance and outlook, Motilal Oswal has revised its estimates and valued Persistent Systems at 34 times its estimated earnings per share (EPS) for fiscal year 2028. The brokerage firm has reiterate its "BUY" recommendation with a target price of INR6,200.