ICICI Securities research report on Persistent Systems
Persistent Systems (PSYS) reported a strong quarter on all fronts – 1) revenue; 2) deal TCV; and 3) margins. The company can address a key investor concern of its ability to improve margins in FY26 given one-off gains in FY25 led by levers of – 1) slower pace of sales and marketing investments; 2) pricing and right shoring; and 3) growing revenue share from higher-margin platform-based services. We largely maintain our FY26–27E EPS and increase our FY25 estimate by ~3%, factoring in the beat in Q2.
Outlook
We continue to value the stock at 51x on Q2FY26E to Q1FY27E EPS of INR 121 to arrive at a TP of INR 6,140 with a potential upside of ~19%. We upgrade PSYS to BUY (from Add) given the recent correction in its stock price.
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