Persistent Systems share price: Soars 12% on stellar Q3 performance, brokerages offer mixed reactions
Shares of Persistent Systems rallied 12 per cent on Thursday following robust Q3 numbers. However, it has received mixed reactions from brokerages.
The company recorded its consolidated net profit for the quarter ended December 2024 at ₹372.99 crore, a growth of 30 per cent, from ₹286.13 crore in the corresponding quarter previous year.
Its revenue from operations rose 23 per cent to ₹3062.3 crore in December 2024 quarter from ₹2498.2 crore in the corresponding quarter previous year.
In addition, the company has declared an interim dividend of ₹20 per share for FY24-25.
Buy recommendations
Domestic brokerage JM Financial is confident on Persistent Systems stating that the company reported a well-rounded performance in Q3, as it met the brokerage’s expectations. The analysts observed that the order backlog has improved considerably, and the margin is firmer. Mounting the company’s generative AI strategy, partnerships with hyperscalers and EBITA margin, the brokerage has continued to value the stock at 55x, and maintained buy rating at an increased target price of ₹7,630 from ₹7,530 earlier.
Motilal Oswal sees 34 per cent upside potential owing to its superior earnings growth trajectory and has reiterated buy rating at a revised target price of ₹7,600.
Nuvama Institutional Equities, maintaining buy call at a target price of ₹7,000, said that the company has delivered strong growth with incremental recovery in core margins in the quarter. “Management is taking the right steps diversifying into new verticals and expanding its current verticals into sub-verticals, with a focused plan to scale up each of them meaningfully,” it added.
Hold or Sell?
PL Capital has retained hold call at a lowered target price of ₹5,970 from ₹6,060 earlier. The brokerage said Persistent Systems’ value proposition and strong play around regulated verticals are keeping it more resilient in this adverse environment. Additionally, the investments around hiring senior leadership team within key verticals have been instrumental in fueling client mining/hunting activities and closing large strategic deals. “However, the valuation looks expensive with all positive factored in the current price,” it added.
Emkay Global has upgraded the stock from sell to reduce rating at a target price of ₹5,300, the brokerage awaits a better entry price to become more constructive on the stock, although valuations remain rich.
Nomura, acknowledging the resilient growth in Q3, remained neutral on the stock at a target price of ₹6,200, while HSBC has maintained a hold call at a target price of ₹5,650. The latter added that Persistent Systems’ accelerating non-healthcare verticals is a positive surprise.
On the other hand, Citi and Kotak Institutional Equities have maintained sell calls at the target price of ₹5,000.
IT stocks shine on Thursday with Coforge and Persistent Systems emerging as among top gainers of the Nifty IT index. Shares of Persistent Systems traded 11.38 per cent higher at ₹6,330 on the NSE as at 12.34 pm, after hitting an intraday high of ₹6,359.10.
On the BSE, the stock soared 11.43 per cent to ₹6,335 at the time of writing.
