Buy Persistent Systems; target of Rs 6000: Sharekhan

Sharekhan's research report on Persistent Systems

Growth across Hi-tech continues to lead due to resilience from the largely non-discretionary product engineering segment. Further, incremental deal wins over the past several quarters have aided in increasing the company’s market share in the product engineering segment. While BFSI and Healthcare& Lifesciences are expected to witness slowdown for couple of quarters, positive signs of stabilising client engagement are emerging. The company has sufficient margin levers to partly offset the margin impact due to wage hike in Q2 and has reiterated its aspiration to achieve 200-300 bps margin improvement over the next 2-3 years.

Outlook

We maintain Buy rating on Persistent Systems Limited (Persistent) with a revised PT of Rs. 6,000, as we believe the company can continue to consistently perform, aided by resilient Hi-tech vertical, robust deal wins, and a strong deal pipeline. At CMP, the stock trades at 27.6/23.8x its FY25/26E EPS.