Persistent Systems shares rise 4% after CLSA, JPMorgan raise targets on Q2 results

Shares of Persistent Systems Ltd. opened 4% higher on Wednesday, October 15, as brokerages remained upbeat about the stock following its strong September-quarter results, which beat estimates on both revenue and margins.

The company reported constant currency revenue growth of 4.4% quarter-on-quarter, against expectations of 3.9%. Earnings Before Interest and Tax (EBIT) margins rose 80 basis points to 16.3%, compared to estimates of 15.7%.

	Q3FY24	Q4FY24	Q1FY25	Q2FY25	Q3FY25	Q4FY25	Q1FY26	Q2FY26
CC Rev QOQ	3.10%	3.40%	5.60%	5.1%	4.6%	4.5%	3.3%	4.40%

CLSA has retained its 'High Conviction Outperform' rating on Persistent and raised its target price to ₹8,270. The brokerage said that it was another robust quarter for the company, driven by growth in order book, revenue, margins, return on equity (ROE), and free cash flow-to-profit conversion, a key investor concern.

Persistent's management reiterated its $2 billion revenue target by FY27, alongside a 100 basis point EBIT margin expansion in FY26 and FY27, positioning the firm to deliver a 29% compound annual growth rate (CAGR) in earnings per share (EPS) over FY25-27.

CLSA has also raised its FY26-28 EPS estimates by 1-4% based on this improved margin outlook.

JPMorgan maintained its "Overweight" rating and increased its price target to ₹7,400.

The company reported its highest-ever total contract value (TCV) at $609 million, up 17% quarter-on-quarter and 15% year-on-year. The annual contract value (ACV) also hit an all-time high of $448 million, growing 29% year-on-year compared to an average of 11% over the past four quarters.

HSBC has maintained a 'Hold' rating but raised its price target to ₹6,000, citing strong second-quarter growth, improved profitability, and recovery in deal wins.

The brokerage said Persistent's strength in software engineering and its growing capabilities in managed-service delivery continue to drive momentum. However, it added that while growth remains industry-leading, valuations are also at elevated levels.

Nomura kept a 'Neutral' stance with a price target of ₹5,200, saying the company's all-round performance and healthy deal pipeline in Q2. It has raised its FY26-28 earnings forecasts by 3-5%.

Persistent Systems' stock is currently trading at 37.5 times its estimated FY27 earnings per share.

Of the 42 analysts tracking Persistent Systems, 24 of them have a 'Buy' recommendation, eight have a 'Hold' rating and 10 recommends 'Sell'.

Shares of Persistent Systems Ltd. settled 0.56% lower on Tuesday at ₹5,299.80. The stock is down 18% so far in 2025.