Hold Persistent Systems; target of Rs 5220: ICICI Securities

ICICI Securities research report on Persistent Systems

PSYS’ revenue growth of 4.2% QoQ CC was ahead of our optimistic estimates. Growth was led by the BFSI and technology verticals. Healthcare vertical has improved, post two quarters of muted growth from client-specific offshoring. TTM TCV, at USD 2.2bn, was up 14% YoY. EBIT margin performance gained from increased offshoring and reduced software licensing cost. PSYS is poised to achieve its FY27 revenue target of USD 2bn and EBIT margin expansion of 200–300bps (~100bps already materialized).

Outlook

We tweak our FY26–28E EPS, retain our one-year forward P/E multiple at 35x and upgrade our rating from Reduce to HOLD given the consistent growth and margin expansion, with Q2FY26 marking 22nd consecutive quarter of 3%+ QoQ USD growth. We expect PSYS to maintain a CQGR of 3.5% for FY26–28E.

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