Persistent Systems Ltd. share price target

PSYS delivered 22.6% YoY revenue growth in Q3FY25, driven by strong vertical performance and acquisitions. EBIT grew 25.5% YoY, while PAT surged 30.4% YoY, reflecting improved margins and robust execution.

Q3FY25 operating performance was a tad better than our estimate. Revenue growth of 4.6% QoQ CC was in-line, while EBITM of 14.9% was slightly ahead of our estimate. Unlike in previous few quarters, growth was broad-based across verticals/geographies

3QFY25 revenue/EBIT margin beat our sub-consensus estimate. It did not say discretionary demand has turned around but said it will deliver

Persistent Systems (PSYS) reported 3QFY25 revenue of USD360.2m, up 4.3% QoQ in USD terms (est. 3.9%) and 4.6% in CC. EBIT margin stood at 14.9% (est. 14.4%).

Persistent Systems Limited delivered robust growth in H1FY25, with quarterly revenue growing by over 5% in constant currency terms. The company, which has delivered 24% revenue CAGR, with significant relative sector outperformance over the last four years, continues to outpace both Tier 1 and Tier 2 companies and remains well positioned to deliver industry-leading growth in FY25. While its key North Americas market is seeing strong growth momentum, the company aims to expand its market share in Europe, potentially through acquisitions to gain access to new customers

Given the company's strong growth potential backed by robust deal wins and superior execution capabilities, we recommend a BUY rating on the stock.

We expect a Revenue/PAT growth at a CAGR of 17.0%/21.0% for FY24-FY26E, respectively, and to witness a revenue/PAT growth of 16.6%/21.8% for FY24-FY27E. Accordingly, we project FY26E EPS of INR 102.7 and assign a P/E multiple of 53x, driven by recent ACV wins, improving discretionary spendings supported by margin expansion due to lower SG&A expenses.

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.

Company reported $345.5 million in revenues, up 5.1% q-o-q in CC terms beating our estimates of $342 million. EBIT margins were flat q-o-q at 14% slightly beating our estimates of 13.9%. The company’s total TCVs stood at $529 million, up14% q-o-q/10%y-o-y.

Met revenue estimate. But a beat on EBIT margin. Strong 1H and ACV should mean high teen revenue growth with flat EBIT margin vs FY24

We interacted with the management of Persistent Systems Limited (Persistent) to understand the business strategy and growth prospects of the company. The company is aspiring to achieve the USD2 billion revenue milestone, aided by its diversified product engineering and IT service offering.

PSYS is targeting a revenue of USD2b by FY27, and the management is optimistic about achieving this target despite a challenging business environment. The company is implementing strict cost management strategies and has visible margin levers such as SG&A, offshoring and pyramid.

Revenue of INR 27,372 Mn (+17.9% YoY/+5.7% QoQ) was driven by BFSI (+9.0% YoY), Healthcare & Lifesciences (+69.7% YoY), and Software, Hi-Tech, and emerging industries (+4.2% YoY), beating our estimate by 1.1%.
EBIT of INR 3,840 Mn rose by 28.9% YoY (+2.6% QoQ), beating our projections by 0.5%; EBIT margins improved by 119bps YoY (-42bps QoQ).

We recommend a BUY rating on the stock.

Persistent Systems Ltd (PSL) reported $328 million in revenues, up 5.6% q-o-q in constant currency (CC) terms, beating our estimates of $326 million.

Cost take-out projects and vendor consolidation to be the prime growth driver for PSYS in FY25

Persistent reported Q4FY24 results largely in line with expectations.
Revenue of INR 25,905 MN (+14.9% YoY) was driven by BFSI (+11.9% YoY), Healthcare & Lifesciences (+31.6% YoY), and Software, Hi-Tech and emerging industries (+10.9% YoY)

Recommendation: Given the company's strong growth potential backed by robust deal wins and superior execution capabilities, we recommend a BUY rating on the stock

Persistent reported revenue of $310.9 million, up 3.4% q-o-q in constant currency (CC) terms, in line with our estimate of $311.2 million, led by growth in Healthcare and BFSI.