Persistent Systems’ shares slumped 9.3% to an intra-day low of Rs 5,086 on the National Stock Exchange after reporting its quarterly results for the first quarter of FY26. While Nomura picked Coforge over Persistent Systems, Motilal Oswal maintained its rating on the back of revenue growth. Here’s a detailed analysis of what brokerages said on Persistent Systems.
Nomura on Persistent Systems: Prefer Coforge over Persistent Systems
Nomura decreased their target price to Rs 5,510 from Rs 5,700 along with tweaking is EPS estimates by 3% over FY26-27. “We prefer Coforge in the mid-cap India IT services space,” said Nomura. The brokerage house retained its ‘Neutral’ rating on the stock given its rich valuation. Persistent is trading at an EPS of 41 times for FY27.
Also, Persistent System’s management iterated its medium-term target of achieving $2 billion of revenue by FY27. “We lower our revenue growth estimate by 190 basis points for FY26 to 16.6% as we bake in 3.5% CQGR for 2Q-4Q FY26F (vs 4.5% earlier),” said Nomura.
Given an uncertain macro environment, the IT company has delayed its salary hike cycle by a quarter to Q3 for FY26. The company notes that it will continue to work on key levers like pricing, utilisation and leverage from sales investments to achieve its medium target of 200-300 bps (vs FY25 level) by the time it reaches $2 billion revenue in FY27.
Motilal Oswal on Persistent Systems: Estimates EPS to grow at 25% CAGR
Motilal Oswal estimates an 18% USD revenue CAGR over FY25-27 for Persistent Systems, which, combined with margin expansion, could result in a 25% EPS CAGR. This places the company in a league of its own as a diversified product engineering and IT services player.
The brokerage house has largely maintained its estimates for FY26/FY27. Owing to its superior earnings growth trajectory, the brokerage believes that the valuation still has room for upside.
Motilal Oswal maintained its ‘Buy’ rating on the stock, while retaining its target price of Rs 6,800.
JM Financial Services on Persistent Systems: Advises buying on dips
The company’s last twelve months book-to-bill is still healthy at 1.47 times. However, slowdown in top healthcare account, a key growth driver over the past few quarters, may further compound worries.
“We are not flustered with client-specific slowdown. Though we acknowledge that pickup in deal wins is needed to build confidence on FY27 growth outlook,” said JM Financial Services.
The company’s head-start in AI-led platform approach puts it in good stead. Out of prudence, the brokerage cut its FY26/27 USD growth to 16%/16% (from 18%/17%), driving 0-2% EPS cuts. That could weigh on near-term performance. “We would advise buying on dips,” said JM Financial Services. The brokerage house retained its ‘Buy’ call on the stock, with a target price of Rs 6,720.