Persistent Systems Upgraded to Buy by LKP Research; Target Price Rs 6350

Persistent Systems Reports Steady Quarter with 3.4% QoQ Growth

Persistent Systems Ltd (PSYS) has delivered a steady quarter, with revenue reaching USD 436mn. The company's revenue growth in constant currency was 3.4% quarter-over-quarter (QoQ), primarily driven by continued strength in the BFSI (Banking, Financial Services, and Insurance) vertical. Additionally, the Healthcare & Life Sciences and Hi-Tech & Emerging verticals also remained supportive, with revenue growth of 11.2% and 14.1% year-over-year (YoY) respectively.

The company's earnings before interest and taxes (EBIT) margin stood at 16.3%, reflecting a decline of approximately 40 basis points (bps) QoQ, adjusted for prior one-offs. Margin pressures were largely attributable to higher consulting, subcontracting, and travel expenses, along with increased spend on software licenses. However, these pressures were partly offset by operational efficiencies and favorable currency movements.

Outlook and Revised Valuation

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Despite resilient execution and strong deal momentum, the combination of softer FY27E commentary and emerging AI-led deflation risks has led to a revision in the company's valuation multiple. The revised valuation multiple is 35x (from 40x), resulting in a revised target price (TP) of ₹6,350 based on FY2028E EPS. Despite this revision, the company maintains its BUY rating.

Revenue Growth Comparison