23 Jan , 2025 By : Debdeep Gupta
Shares of Persistent Systems gained over 7 percent on December 22 after the company reported robust growth in its consolidated net profit and revenue for the December quarter, prompting mixed reactions from brokerages. The IT major posted a consolidated net profit of Rs 372.99 crore, marking a sequential rise of 15 percent and a 30 percent year-on-year increase. Its revenue also impressed, growing by 6 percent QoQ and 23 percent YoY to Rs 3,062.3 crore.
At 9.20 AM, shares of the company traded over 4 percent higher at Rs 5,932. On a year-to-date basis, the stock has declined over 7 percent, underperforming the Nifty 50, which declined by 3 percent during the same period.
Persistent Systems announced its results on December 21 after market hours, which spurred a range of brokerage updates, representing divided views on Persistent Systems.
Nuvama Institutional Equities raised its target price to Rs 7,000, maintaining a 'Buy' rating. "Management is taking the right steps diversifying into new verticals and expanding its current verticals into sub-verticals, with a focused plan to scale up each of them meaningfully," the brokerage said. "At 50x FY26E PE, the stock appears expensive, but that is justified in our opinion given Persistent Systems healthy growth profile," it added.
Motilal Oswal Financial Services echoed this optimism, citing further upside potential despite rich valuations. "The stock is currently trading at an admittedly expensive valuation. That said, owing to its superior earnings growth
trajectory, on a PEG basis, we believe the valuation still has room for upside."
Nomura remained neutral with a target price of Rs 6,200, appreciating Persistent's Q3 execution and steady deal wins but remaining cautious about its valuation. The brokerage highlighted that while margins showed improvement, future growth may already be priced into current levels.
HSBC acknowledged Persistent System's robust growth, especially in non-healthcare verticals, which it described as a positive surprise. Yet, it maintained a hold call with a target price of Rs 5,650.
Citi Research struck a bearish tone despite Persistent's solid Q3 performance. The brokerage raised its target price to Rs 5,000 but maintained a 'Sell' rating, pointing to stretched valuations at 51x FY26 earnings.
The company's ability to secure large deals was another highlight. Persistent added a major client in the energy services sector, with its order pipeline now exceeding $1 billion. Analysts noted that advanced negotiations for large deals could further bolster its order book in FY26.
0 Comment