Persistent Systems, a global IT company specializing in software products and technology services, is rated a 'BUY' by HDFC Securities. The analysis provides specific entry bands and target valuations for investors to consider.
According to the research, investors can initiate positions in the Rs 5170-5280 band and add on dips within the Rs 4650-4740 band. Analysts project the base case fair value of the stock to be Rs 5600, while the bull case fair value is set at Rs 5950 over the next four quarters.
Financial Performance Overview
The company reported strong financial results in Q3FY26. Consolidated revenue grew 23.4% year-over-year (YoY) to Rs 3,778 crore in Q3FY26, with revenue in USD terms up by 17.3% YoY to US$ 422.5 mn.Key financial figures across several fiscal years demonstrate robust growth:
| Particulars (Rs Cr) | Q3FY26 | Q3FY25 | YoY-% | Q2FY26 | QoQ-% | FY23 | FY24 | FY25 | FY26E | FY27E | FY28E |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Total Operating Income | 3778 | 3062 | 23.4 | 3581 | 5.5 | 8351 | 9822 | 11939 | 14686 | 17530 | 20376 |
| EBITDA | 733 | 538 | 36.3 | 683 | 7.3 | 1519 | 1724 | 2058 | 2686 | 3339 | 3988 |
| APAT | 439 | 373 | 17.8 | 471 | -6.8 | 943 | 1130 | 1400 | 1923 | 2276 | 2742 |
| Diluted EPS (Rs) | 27.9 | 23.6 | 17.8 | 29.9 | -6.8 | 59.8 | 71.6 | 88.8 | 121.9 | 144.3 | 173.8 |
| RoE-% | 25.1 | 24.5 | 24.8 | 26.9 | 27.8 | 28 | |||||
| P/E (x) | 87.5 | 73 | 58.9 | 42.9 | 36.2 | 30.1 | |||||
| EV/EBITDA (x) | 53.2 | 46.8 | 39.1 | 29.6 | 23.6 | 19.4 |
The company has maintained a strong revenue mix, with BFSI contributing 35% of revenue in Q3FY26. Geographically, the US remained the largest contributor, accounting for 81.5% of revenue in Q3FY26.
Business Highlights and Outlook
Persistent Systems is positioning itself for growth by focusing on large deals, client mining, and maintaining strong relationships. The company is noted for winning deals in the BFSI sector, challenging larger competitors in the process. The firm anticipates that BFSI is set to lead future growth, followed by Hi-Tech, while Healthcare & Life Sciences is regaining momentum.On the business front, Persistent expects to deliver strong results despite the global environment, continuing its expansion plans in Europe and the Asia Pacific while maintaining its focus on North America. The company is seeing traction in large, multi-year deals centered on AI-led engineering and data modernization.
In terms of order book strength, the trailing twelve-month (TCV) stood at US$ 674.5 mn in Q3FY26, up from US$ 609.2 mn in Q2FY26. The new order book (TTM) booked at US$ 369 in Q3FY26. The company has maintained guidance to achieve US$ 2bn in revenue by FY27E, implying a CAGR of 19% over FY25-FY27E, and targets US$ 5bn by FY31E, implying a CAGR of approximately 26% over FY27-FY31E.
Key Financial Metrics and Positioning
The company’s financial profile is characterized by stability, substantial networth, and strong liquidity. Over the last decade, the company reported revenue growth at a 16.4% CAGR in US$ terms, alongside EBITDA growth at 18% CAGR and net profit growth at 17% CAGR on a consolidated basis.The historical and projected profitability ratios show an upward trend:
| Ratio | FY23 | FY24 | FY25 | FY26E | FY27E | FY28E |
|---|---|---|---|---|---|---|
| EBITDA Margin | 18.2 | 17.6 | 17.2 | 18.3 | 19 | 19.6 |
| EBIT Margin | 14.9 | 14.4 | 14.7 | 15.7 | 16.5 | 17.1 |
| APAT Margin | 11.3 | 11.5 | 11.7 | 13.1 | 13 | 13.5 |
| RoE | 25.1 | 24.5 | 24.8 | 26.9 | 27.8 | 28 |
The company also has a negligible debt status, maintaining a healthy capital structure. As of December 31, 2025, cash and equivalents were approximately Rs 2,905.
Industry Presence and Technology Focus
Persistent Systems services various industries, including BFSI, HLS, and software and hi-tech. The organization provides solutions utilizing advanced technologies such as analytics, big data, cloud computing, and mobility.A significant growth driver is Artificial Intelligence (AI). The company is leveraging its AI platform, SASVA, iAURA, and GenAI Hub across product engineering and for enterprise applications. The platform, which launched an AI-powered large language model (LLM) and machine learning (ML) SASVA platform in March 2024, is designed to boost productivity by minimizing technical debt throughout software development.
Sector Exposure
The revenue mix shows diverse exposure across sectors:| (% of revenue) | Q4FY24 | Q1FY25 | Q2FY25 | Q3FY25 | Q4FY25 | Q1FY26 | Q2FY26 | Q3FY26 |
|---|---|---|---|---|---|---|---|---|
| BFSI | 30.7 | 30.8 | 31.5 | 31.7 | 32.3 | 33.9 | 34.8 | 35 |
| HC & Lifesciences | 24.2 | 26.7 | 27.8 | 27.8 | 26.8 | 25.3 | 25.2 | 25.4 |
| Tech-Cos &Emerging | 45.1 | 42.5 | 40.7 | 40.5 | 40.9 | 40.8 | 40 | 39.6 |
The share holding pattern as of December 2025 indicated significant institutional backing, with Institutions holding 52.6% and Promoters holding 30.3%.
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The information provided is for general informational purposes only and does not constitute investment advice, a recommendation, or an offer to buy or sell any securities. Readers are advised to rely on their own assessment and judgment and consult appropriate financial advisers, if required, before taking any investment-related decisions.