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Axis Securities Report
Persistent Systems Ltd.'s shares are likely to be in focus after Axis Securities reiterated its ‘Buy' rating on the stock, even as broader IT stocks remain under pressure, citing strong growth visibility and benefits from its recent Nagarro acquisition.
The brokerage has maintained a target price of Rs 6,270, implying a potential upside of around 46% from current levels.
Axis Securiteis highlighted that Persistent has delivered a revenue /EbitT/PAT compound annual growth rate of 21%/24%/25% over FY23–26, backed by strong execution capabilities, deal wins and strategic tech adoption.
The brokerage believes the target valuation appears reasonable compared to global digital engineering peers, considering Nagarro's strong European franchise, diversified client base, and complementary capabilities in AI, SAP, and enterprise applications.
The acquisition cost, however, could weigh on persistent earnings in the near term. Apart from revenue synergies, operational improvements and sustained client retention are expected to strengthen the company's operational performance in the longer run.
Currently, the company is trading at 27x/23x P/E multiples of FY27E/FY28E.
The brokerage values the company at 34 times FY28E earnings per share and maintains Buy rating on the stock with an unchanged target price of Rs 6,270/share, implying an upside of 46% from the current market price.
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