'Sell' Persistent Systems Shares Maintains Dolat Capital Post Q1 Results — Check Target Price

Persistent Systems' management acknowledged increased macro uncertainty and cautious client spending, causing delayed ramp-up. Commentary remained cautiously optimistic, supported by a robust deal win (trailing twelve months annual contract value up 11% YoY at $1.5 billion), pipeline and momentum in its AI-led strategy.

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Dolat Capital Report

Persistent Systems Ltd. posted revenue of $389.7 million, up 3.3% in constant currency terms (our estimate 4.2%), led by strong growth in BFSI growing 9.0% QoQ, while Hi-Tech was up +3.6% QoQ.

Healthcare saw a decline of 1.9% QoQ due to a planned shift from onsite to offshore for a key client. Operating profit margin remained resilient at 15.5% (our estimate 14.8%), supported by lowered ESOP charge (+230bps QoQ), offsetting the impact of forex and increased amortization.

Management acknowledged increased macro uncertainty and cautious client spending, causing delayed ramp-up. Commentary remained cautiously optimistic, supported by a robust deal win (trailing twelve months annual contract value up 11% YoY at $1.5 billion), pipeline and momentum in its AI-led strategy.

While management remains confident in delivering top-quartile growth, we believe risks from macro headwinds and cautious client spending are not well priced in.

We revise earnings estimate by 1%/-3% for FY26/FY27E and maintain our ‘Sell’ rating with a target price of Rs 4,730, valuing the company at 39x our FY27E EPS.

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