Reduce Persistent Systems; target of Rs 4550: ICICI Securities

ICICI Securities research report on Persistent Systems

Persistent Systems (PSYS) continues to deliver all-round impressive performance irrespective of market conditions. Management mentioned clients have become cautious and there is slight delay in conversion of pipeline to TCV. We note FY25 TCV/ACV grew 15%/13% YoY, tad lower than ~16% revenue CAGR (FY25-27) required to reach USD 2bn revenue runrate by FY27. However, management is confident of delivering industry-leading growth despite tough macros led by focusing on growing deal pipeline and pivoting to high growth areas. We raise FY26/27E EPS by 2.6%/2.8% factoring in lower tax rate and beat in Q4 partly offset by currency adjustment.

Outlook

We continue to value the stock at 35x on Q4FY26E to Q3FY27E EPS of INR 130 to arrive at TP of INR 4,550. Maintain REDUCE, given the premium valuation.