Persistent Systems shares gain 4% as JP Morgan advises 'buy the dip' with 30% upside potential

Last week, Persistent Systems lost over 7 percent, extending its year-to-date decline to more than 14 percent.

Shares of Persistent Systems rallied 4 percent to Rs 5,747 in early trade on February 18, snapping its six-day losing streak on the bourses, after JP Morgan issued an 'overweight' call on the stock and urged investors to 'buy this dip' amid the recent correction.

With a price target of Rs 7,200, the international brokerage forecasts an upside potential of 30 percent from the last closing price of Rs 5,531 on the National Stock Exchange. Last week, Persistent Systems lost over 7 percent, extending its year-to-date decline to more than 14 percent.

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The brokerage advises buying the dip, calling it a high-quality growth compounder. It expects a 21 percent revenue and 29 percent PAT CAGR over FY25-27, supported by record-high deals driving high-teens revenue growth in FY26. Persistent has set a $5 billion revenue target by FY31, implying a strong 26 percent CAGR over FY27-31. Margin expansion is also likely, aided by lower subcontractor costs and operating leverage.

The mid-tier reported a 30.4 percent year-on-year rise in net profit to Rs 373 crore for Q3 FY24, driven by its AI-led, platform-driven services strategy, despite the seasonally weak quarter for IT. Sequentially, net profit rose 14.8 percent. Consolidated revenue for the quarter grew 22.6 percent YoY to Rs 3,062.28 crore, with a 5.7 percent increase sequentially. The company also saw a 90 basis points improvement in operating margin, reaching 14.9 percent, following two quarters of flat margins at 14 percent.

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The order booking for the quarter was at $594.1 million in Total Contract Value (TCV) and $428.3 million in Annual Contract Value (ACV) terms. These were driven by deals won in the BFSI, Healthcare and life sciences, emerging industries, software and hi-tech sectors.

Persistent’s headcount increased by 704 employees sequentially. The total headcount of the company was 23,941 as of Q3.

At about 9:20 am, shares of the company were trading at Rs 5,697, higher by 3 percent from the last close on the NSE.

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