Persistent Systems shares slip 5% despite higher price targets; buy, sell or hold?

Shares of Persistent Systems fell 5% in the afternoon session on Wednesday after the IT services firm reported its Q3 earnings. Persistent Systems stock slipped 4.99% to Rs 6026 today against the previous close of Rs 6343 on BSE. Market cap of Persistent Systems stood at Rs 98,262 crore. The stock opened lower at Rs 6335 today. Later, the stock closed 1.57% lower at Rs 6243.80.   

Motilal Oswal said margin beat by the IT firm was surprising, but it awaits more clarity on it sustaining. However, the surprising element was that this was not visible in higher revenue per employee, which was flat. 

The brokerage raised its price target to Rs 8,500, an upside of 34% against the previous close of Rs 6343.20. 

Persistent Systems reported a strong margin performance, with adjusted EBIT margin expanding 40 bps
QoQ to 16.7% in 3QFY26. 

Elara Capital has assigned a sell call to the IT stock with a higher price target of Rs 5,630 against the previous target of Rs 5250. The firm continues to report a strong broadbased growth across all customer segments. Top 5/10/20 customers, which forms 33% to 54% of its revenue mix, reported 18-20% CAGR in FY22-25, according to Elara. 

"We raise our revenue estimates by 1-3% for FY27E/FY28E, in line with Q4FY27 guidance. We also revise our earnings estimates upwards by 6-8% as we continue to build margin expansion in the next two years," said Elara. 

JM Financial has a buy call on the stock with a price target of Rs 7,600 against the earlier Rs 7280. The fresh price target signals a 20% upside to the previous close. 

"Growth was broad based across top-client cohorts. Services growth in the quarter was 2.6% while software licence revenue grew 40% sequentially. The quarter saw a large beat on margins, added JM Financial. 

Choice Institutional Equities has also raised its price target to Rs 7,000 from Rs 6,050 post Q3 earnings. The brokerage has assigned an upside of 10.9% to the IT services stock. 

"Given the robust outlook, we revise our estimate upwards and expect PSYS’ Revenue/EBIT/PAT to expand at a CAGR of 22.6%/30.9%/30.3% over FY25 FY28E. Accordingly, we raise our target price to Rs 7,000 

According to Choice, the company continues to transition from purely labour based contracts to hybrid pricing models, combining people and tool-based fees, which alone contributed 150 bps QoQ margin expansion during the quarter. 

"We expect margin to expand to 17.0% by FY27E, driven by pricing  discipline, utilisation, and increased adoption of AI-led delivery models (from Rs 6,050), implying a 40x PE multiple, while maintaining our ADD rating," said Choice. 

The IT firm services firm reported a 17.8 per cent rise in consolidated net profit to Rs 439.4 crore for the third quarter ended December 2025 compared to Rs 373 crore in the year-ago period. Revenue from operations for the reporting quarter stood at Rs 3,778.2 crore, registering a robust growth of 23.4 per cent year-on-year (YoY) from Rs 3,062.3 crore in Q3 FY25. 

The Board of Directors also declared an interim dividend of Rs 22 per equity share on the face value of Rs 5 each for the financial year 2025-26.