Nuvama has reiterated its positive stance on Persistent Systems, Coforge, and MphasiS after their Q3FY26 results, citing better-than-expected revenue growth, steady margins, and strong deal activity. Across all three companies, Nuvama said execution remained firm during the quarter, with order intake and pipelines providing visibility for the coming quarters, while maintaining its existing ratings and target prices based on updated earnings estimates.
Nuvama on Persistent Systems: ‘Buy’
Nuvama Institutional Equities has maintained a ‘Buy’ rating on Persistent Systems with a 12-month target price of Rs 7,700, implying an upside of about 27.4% from the current level, based on the brokerage’s valuation framework. Nuvama said Persistent Systems delivered strong Q3FY26 results, with revenue rising 4.1% quarter-on-quarter in constant currency to $422.5 million, which was ahead of its estimate of 3.4% growth.
Adjusted EBIT margin stood at 16.7%, expanding sequentially despite wage hikes, and also exceeding expectations.
The brokerage said margin improvement was supported by platform-led sales and AI-related efficiencies, while total contract value for the quarter came in at $674.5 million, up 14% year-on-year.
Nuvama said growth during the quarter was broad-based, led by BFSI, healthcare, and hi-tech verticals, while North America and Europe continued to show steady traction. The brokerage noted that AI platform monetisation through products such as SASVA and IAURA contributed to margin performance, with benefits expected to continue as these platforms scale across clients.
It also highlighted that employee utilisation remained stable at 85.8%, while headcount increased by around 469 employees during the quarter.
Commenting on margins, Nuvama said adjusted EBIT margin improvement was driven by foreign exchange gains, lower subcontracting costs, better utilisation, and AI-led deal mix, partly offset by wage hikes and furloughs. The brokerage added that labour code-related impact was excluded while assessing underlying margin strength.
Management guidance, as noted by Nuvama, remains unchanged, with the company continuing to track towards its medium-term revenue targets.
“Persistent delivered a solid performance with margin expansion aided by AI-led platform sales. We continue to view Persistent as leading the growth as well as the AI-led transformation opportunity in the industry,” Nuvama Institutional Equities said in its report.
Nuvama on Coforge: ‘Buy’
Nuvama Institutional Equities has retained a ‘Buy’ rating on Coforge and raised its target price to Rs 2,500, which implies an upside of around 49.9% from current levels. The brokerage said Coforge reported strong Q3FY26 numbers, with revenue growing 4.4% quarter-on-quarter in constant currency to $478 million, ahead of its estimate of 3% growth. Adjusted profit after tax stood at Rs 360 crore, also exceeding expectations, while EBIT margin came in at 13.4%, higher than Nuvama’s forecast.
Nuvama highlighted that the 12-month executable order book increased to $1.7 billion, marking a 30.4% year-on-year rise, supported by strong deal wins during the quarter. Emerging verticals led growth, while healthcare, hi-tech, travel, and insurance segments also reported sequential improvement.
The brokerage said Coforge signed six large deals during the quarter, spanning BFS, travel, insurance, and healthcare.
On margins, Nuvama said sequential pressure was largely due to wage hikes and hedging losses, partly offset by operational efficiencies and lower ESOP costs. It noted that free cash flow remained healthy at 110% of PAT, with management aiming to sustain strong cash generation levels.
The brokerage also pointed out that Coforge is in the final stages of securing a $550 million term loan to refinance Encora’s debt, and no longer plans to raise funds through a QIP.
“Coforge delivered solid Q3FY26 numbers while preparing a strong foundation for its long-term sustainability through revenue diversification and improving cashflows,” Nuvama Institutional Equities said, adding that it continues to retain Coforge as a top pick within the sector.
Nuvama on Mphasis: ‘Buy’
Nuvama Institutional Equities has maintained a ‘Buy’ rating on Mphasis with a target price of Rs 3,400, indicating an upside of about 24.2% from the current price. The brokerage said Mphasis reported stable Q3FY26 performance, with revenue increasing 1.5% quarter-on-quarter in constant currency to $451.4 million, slightly ahead of estimates.
EBIT margin remained steady at 15.2%, broadly in line with expectations, while adjusted profit was also in line.
Total contract value stood at $428 million during the quarter.
Nuvama noted that growth was led by BFSI, especially the insurance segment, supported by ramp-up of large deals.
While deal wins remained strong, the brokerage said revenue growth continued to lag deal activity, and faster conversion would be required to improve near-term growth visibility. It highlighted that trailing twelve-month deal wins have doubled year-on-year to $2.1 billion, while the large deal pipeline increased sharply.
The brokerage said margins stayed within the guided band despite ongoing investments, and management reiterated its EBIT margin guidance of 14.75% to 15.75%. Nuvama also noted that a high share of new deals during the quarter were AI-led, with management indicating stable pricing and no signs of AI-driven pricing pressure.
“Mphasis delivered strong deal-wins again, although revenue growth still lags deal activity and needs to pick up to provide higher growth visibility,” Nuvama said in its report.
Conclusion
Nuvama Institutional Equities said that Persistent Systems, Coforge, and Mphasis continue to show steady execution across revenue growth, margins, and deal activity, supported by strong order books and pipelines. While near-term growth trends vary across companies, Nuvama has retained its positive ratings and target prices, citing earnings visibility and operational performance reflected in the latest quarterly results.