Buy Persistent Systems; target of Rs 6705 HDFC Securities

HDFC Securities is bullish on Persistent Systems has recommended buy rating on the stock with a target price of Rs 6705 in its research report dated October 19, 2023.

Broker Research

October 21, 2023 / 13:25 IST

Buy

26 Aug, 2025 12:21

Volume

Todays L/H

HDFC Securities' research report on Persistent Systems

Persistent Systems (PSYS) posted industry-leading sequential growth and its highest-ever deal TCV (both new and renewal). PSYS’ consistency in its deal velocity provides high visibility for growth ahead (factored 14/17% growth in FY24/25E in USD terms). PSYS’ strong revenue growth of 3.1% QoQ and 14.1% YoY in Q2FY24 and 15.6% growth in H1FY24 coupled with strong bookings trajectory will take PSYS’ growth premium to tier-1 IT to 10pp in FY24E. PSYS’ positives include consistency in winning large deals (vs. tier-1 competition), large client mining progression (USD 5mn+ accounts 2.5x in three years), growth in T50, sequential improvement in cash generation (>70% OCF/EBITDA targeted for FY24E). PSYS’s (1) strong digital prowess enabled by a high certification pool (>14.7k certifications in Microsoft, AWS, Google Cloud, Salesforce, IBM), (2) focused vertical approach, and (3) recent leadership additions will support its growth ahead as the company targets doubling revenue in the next four years. Margin upside to accrue from utilisation improvement (~100bps scope for margin improvement), margin improvement in H-Tech vertical and operational efficiencies aggregating to 150bps potential for margin improvement in two years.

Outlook

Maintain BUY on PSYS (top pick in midtier IT), with TP of INR 6,705, based on 32x Sep-25E EPS, factoring 24% EPS CAGR over FY23-26E.

For all recommendations report, click here