Persistent Systems: Prabhudas Lilladher Maintains 'Buy' Recommendation with Target Price of Rs 6400

Persistent Systems Fails to Meet Revenue Estimates, Trims Outlook

Persistent Systems, a leading technology firm, has reported a revenue performance that fell short of analysts' expectations. According to a research report by Prabhudas Lilladher, the company's revenue growth of 3.4% quarter-on-quarter (QoQ) on a constant currency (CC) basis was below the estimated growth of 4.3% QoQ CC. The underperformance was attributed to the company passing productivity benefits to its key clients.

Despite the revenue miss, Persistent Systems demonstrated strong execution in terms of winning new business, with its Annual Contract Value (ACV) growing 37.7% year-over-year (YoY) in Q4 and 22.7% YoY in FY26. The company's management remains optimistic about its growth momentum, expecting it to continue across all three verticals, despite the escalating geo-political tensions. The deployment of the company's products and solutions has been beneficial in optimizing resources and achieving faster time-to-market.

Persistent Systems has maintained its aspiration to achieve an annualized revenue run-rate of US$ 2 billion and US$ 5 billion by FY27E and FY30E, respectively. However, considering the quarterly miss and the impact of AI-led productivity pass-back and geo-political factors, Prabhudas Lilladher has trimmed its revenue estimates for the company.

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The research firm has retained its margin estimates largely unchanged and has assigned a price-to-earnings ratio (P/E) of 35x to FY28E earnings per share (EPS) to arrive at a target price (TP) of INR 6,400. Prabhudas Lilladher continues to recommend a BUY rating for Persistent Systems.