Persistent Systems holds $2 bn target; premium valuation seen justified; target prices
MOFSL has projected an 18 per cent dollar revenue growth for Persistent Systems, compounded annually over FY25-27, which combined with margin expansion, could result in a 25 per cent EPS CAGR.
- Jul 24, 2025,
- Updated Jul 24, 2025 8:29 AM IST
Persistent Systems Ltd posted a healthy June quarter, with analysts upbeat on its growth prospects. Optimism stems from the company’s strategic bets on AI and platform-led services, solid financials, strong deal wins, and its pricing edge over peers. The IT firm reaffirmed its $2 billion revenue goal by FY27, with brokerages saying it justifies a growth premium.
Nuvama Institutional Equities said Persistent Systems continued to deliver industry-leading growth of 18.7 per cent YoY in Q1FY26. Its FY27 revenue target of $2 billion alludes to strong CAGR of 19 per cent. All along, its margins and cashflow remain robust, it said.
"The stock is now trading at 40x P/E FY27 – which might appear expensive, but we find it justified given the 24 per cent earnings CAGR anticipated over FY25–27E; retain ‘BUY/SO’," Nuvama said.
MOFSL has projected an 18 per cent dollar revenue growth for Persistent Systems, compounded annually over FY25-27, which combined with margin expansion, could result in a 25 per cent EPS CAGR.
This places the company in a league of its own as a diversified product engineering and IT services player, MOFSL said.
"We largely maintain our estimates for FY26E/FY27E. Owing to its superior earnings growth trajectory, on a PEG basis, we believe the valuation still has room for upside. We value PSYS at 48x FY27E EPS. Reiterate BUY with a target of Rs 6,800," it said.
For the June quarter, Persistent Systems' revenue at $390 million was in line with consensus estimates. It was up 3.3 per cent QoQ and 18.7 per cent YoY. Nirmal Bang had estimated 3 per cent QoQ CC growth.
The company’s focus on platformization and outcome-based engagements, coupled with its strong partnerships, positions it well to capitalise on emerging opportunities and achieve its ambitious growth targets of $2 billion by FY27 and $5 billion by FY31, Nirmal Bang said.
"After a continued order book momentum and ambitious revenue and margin goals for FY27, we upgrade the stock to a ‘BUY’ from ‘HOLD’ earlier with a target of Rs 6,496 (vs earlier Rs6,337), valuing PSYS at an unchanged multiple of 46.8x June-27E EPS (~6% below 10-year average mean of 50.2x). The company is continuously outpacing the industry despite demand headwinds and showing an immunity of business from macro uncertainties. This keeps PSYS unique in the IT services pack and continues to support its valuation premium as compared to peers," Nirmal Bang said.
Persistent Systems Ltd posted a healthy June quarter, with analysts upbeat on its growth prospects. Optimism stems from the company’s strategic bets on AI and platform-led services, solid financials, strong deal wins, and its pricing edge over peers. The IT firm reaffirmed its $2 billion revenue goal by FY27, with brokerages saying it justifies a growth premium.
Nuvama Institutional Equities said Persistent Systems continued to deliver industry-leading growth of 18.7 per cent YoY in Q1FY26. Its FY27 revenue target of $2 billion alludes to strong CAGR of 19 per cent. All along, its margins and cashflow remain robust, it said.
"The stock is now trading at 40x P/E FY27 – which might appear expensive, but we find it justified given the 24 per cent earnings CAGR anticipated over FY25–27E; retain ‘BUY/SO’," Nuvama said.
MOFSL has projected an 18 per cent dollar revenue growth for Persistent Systems, compounded annually over FY25-27, which combined with margin expansion, could result in a 25 per cent EPS CAGR.
This places the company in a league of its own as a diversified product engineering and IT services player, MOFSL said.
"We largely maintain our estimates for FY26E/FY27E. Owing to its superior earnings growth trajectory, on a PEG basis, we believe the valuation still has room for upside. We value PSYS at 48x FY27E EPS. Reiterate BUY with a target of Rs 6,800," it said.
For the June quarter, Persistent Systems' revenue at $390 million was in line with consensus estimates. It was up 3.3 per cent QoQ and 18.7 per cent YoY. Nirmal Bang had estimated 3 per cent QoQ CC growth.
The company’s focus on platformization and outcome-based engagements, coupled with its strong partnerships, positions it well to capitalise on emerging opportunities and achieve its ambitious growth targets of $2 billion by FY27 and $5 billion by FY31, Nirmal Bang said.
"After a continued order book momentum and ambitious revenue and margin goals for FY27, we upgrade the stock to a ‘BUY’ from ‘HOLD’ earlier with a target of Rs 6,496 (vs earlier Rs6,337), valuing PSYS at an unchanged multiple of 46.8x June-27E EPS (~6% below 10-year average mean of 50.2x). The company is continuously outpacing the industry despite demand headwinds and showing an immunity of business from macro uncertainties. This keeps PSYS unique in the IT services pack and continues to support its valuation premium as compared to peers," Nirmal Bang said.