Strong execution and deal momentum kept brokerages constructive on Persistent Systems, Ltd. with Investec and UBS both raising target prices after the company delivered margin expansion and robust earnings, even as management signalled a sharper focus on growth over further margin gains.
Investec has reiterated its 'hold' rating on Persistent Systems, while raising its target price to Rs 6,665 from Rs 5,825, on the back of what it described as flawless execution during the quarter. The brokerage highlighted a 44 basis point quarter-on-quarter expansion in EBIT margin, a notable achievement given the 180 bps drag from compensation hikes. According to Investec, the improvement in margins underscores operational strength and also provides the company with enough headroom to reinvest in growth initiatives going forward.
Deal activity remained a key positive. Net new deal wins (ACV) came in at $256 million, which marginally exceeded the previous quarter's all-time high, signalling sustained demand and a healthy pipeline despite a challenging macro environment.
Separately, UBS maintained its 'buy' rating on Persistent Systems and marginally increased its target price to Rs 7,490 from Rs 7,425, citing a continued robust performance in Q3 FY26. The brokerage noted that, after adjusting for the impact of the new labour code, earnings per share were 7–11% ahead of expectations, reflecting strong underlying execution.
UBS, however, flagged that management did not commit to further margin expansion at current levels. Instead, the company emphasised a strategic shift towards driving growth, with margins now seen as comfortable and sustainable, allowing Persistent to prioritise scale and deal momentum over incremental margin gains.
Persistent Systems Q3 Highlights (Consolidated, QoQ)
- Profit down 6.8% at Rs 439 crore versus Rs 471 crore (QoQ)
- Revenue up 5.5% at Rs 3,778 crore versus Rs 3,581 crore (QoQ)
- EBIT up 8.5% at Rs 632 crore versus Rs 583 crore (QoQ)
- Margin at 16.7% versus 16.3% (QoQ)
- To Pay Interim Dividend of Rs 22 per share
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