Persistent Systems stock jumps over 6% after strong Q2 results; brokerages raise target prices

Shares of Persistent Systems surged over 6 percent to Rs 5,688.7 in early trade on Wednesday, extending gains after the IT company’s strong September quarter results prompted several brokerages to raise target prices. The stock has risen sharply as analysts cited broad-based growth and margin expansion, though some cautioned that valuations remain elevated.

Persistent Systems on Tuesday reported a 45 percent year-on-year rise in consolidated net profit to Rs 471.4 crore for Q2 FY26, beating Street estimates. Revenue grew 23.6 percent to Rs 3,580.7 crore, while operating profit jumped 44 percent to Rs 583.7 crore with margins improving to 16.3 percent. The company reported total contract value (TCV) of $609.2 million and annual contract value (ACV) of $447.9 million for the quarter.

• Also read | Persistent Systems Q2 profit jumps 45% YoY to Rs 471 crore, beats estimates

Brokerage views

CLSA presented a bullish stance with high-conviction outperform rating, and raised its target price to Rs 8,270 per share on Tech Mahindra stock. The brokerage cited “another strong quarter” with growth across order book, revenue, margins, return on equity and free cash flow. The brokerage noted management’s reiteration of its $2-billion revenue target for FY27 and projected a 29 percent EPS CAGR over FY25–27.

HSBC issued a hold rating, but lifted its target to Rs 6,000 per share, saying growth was strong and profitability improved, supported by deal-win recovery. It highlighted Persistent’s software-engineering strengths and expanding managed-services capabilities but added that the stock’s high valuation limits further upside.

Nomura gave a neutral rating with a target of Rs 5,200 per share, noting an “all-round performance” in Q2, with margins benefiting from lower software-licence costs. It raised FY26-28 EPS estimates by 3-5 percent but said the stock is trading at a rich multiple of 37.5 times FY27 EPS.

Persistent System stock trades at a P/E of around 58 times, and has a dividend yield of 0.62 percent.