Persistent Systems’ shares fell 7% to ₹ 5,220 after Q1 FY26 showed a 39% PAT rise to ₹ 425 Cr, but slower-than-expected revenue growth and flat margins spooked investors. Read the full analysis, broker views, valuation, and whether buy-on-dip makes sense.
📉 Persistent Share Price Today: Market Reaction
Shares of Persistent Systems Ltd dropped nearly 7%, reaching ₹ 5,190‐5,220 on July 24, 2025. This despite posting a strong 38.7% YoY rise in Q1 profit after tax (PAT) to ₹ 425 Cr. The sharp move reflects investor disappointment in slower revenue and margin growth. The Economic TimesNDTV Profit
📊 Q1 FY26 – Key Financial Highlights
| Metric | Q1 FY26 Result | YoY / QoQ Change |
|---|---|---|
| PAT | ₹ 425 Cr | +38.7% YoY / +7.4% QoQ PR NewswireThe Economic Times |
| Revenue | ₹ 3,334 Cr | +21.8% YoY / +2.8% QoQ PR NewswireThe Economic Times |
| EBIT (Operating Profits) | ₹ 518 Cr | +34.8% YoY / +2.5% QoQ PR NewswireThe Economic Times |
| EBIT Margin | ~15.5% | Flat vs estimate (~15.6%) The Economic TimesPR Newswire |
| Order Book (TCV) | $520.8 M (ACV $385.3 M) | — PR Newswire |
🧩 Why the Stock Dropped Despite Strong Profits
- Revenue Slight Miss:
Topline growth at 2.8% QoQ was slightly below expectations (~₹ 3,357 Cr). The Economic Times - Stagnant Margins:
EBIT margin of 15.5% missed the anticipated 15.6%, raising concerns over pricing power and cost pressure. The Economic Times - Investor Expectations:
Markets priced in sharper growth, given the company’s AI-led push and deal wins. The modest results led to profit-taking. PR NewswireNDTV Profit
📈 Fundamentals & Valuation Snapshot
- P/E (TTM): ~62x ReutersReuters
- P/S Ratio (TTM): ~7.3x ReutersReuters
- ROE: ~17%; ROCE: ~11% ReutersReuters
- Debt-to-Equity: ≈0.05 (virtually zero debt) ReutersReuters
- Cash Flow from Operations: ₹10,700 Cr annual ReutersReuters
Strong profitability, clean balance sheet, and cash flow are cornerstone strengths.
🧠 Broker Insights & Market View
- Motilal Oswal & Nuvama retained “Buy” ratings with targets between ₹ 6,600–6,800 The Economic Timesmoneycontrol.com
- Antique Sec downgraded to “Hold” with a conservative TP of ₹ 5,350 The Economic TimesThe Economic Times
- Dolat Capital assigned a “Sell” rating (TP ₹ 4,730), citing macro uncertainties and slower client spending NDTV Profit
Buy or Wait? The Investment Case
✅ Short-Term View:
The dip offers an entry point at discounted valuation, provided upcoming quarters show stronger revenue or expanding margins.
✔ Long-Term Perspective:
Persistent’s AI-driven services, cloud capabilities, strong cash flow, and debt-free structure make it a solid mid-cap IT contender.
⚠ Risks:
Macro slowdown, cautious client budgets (especially in healthcare), and margin pressures remain key risks. NDTV ProfitThe Economic Times
🙋 FAQs
Q1: Why did Persistent drop despite strong profits?
Due to slightly weak revenue growth, flat margins, and unmet analyst expectations. The Economic TimesThe Economic Times
Q2: Is ₹5,200 a bargain?
If you believe margins rebound and deal wins continue, dip buying around this level could make sense.
Q3: What’s the valuation like?
At ~62x P/E, its multiple is high but reflects strong earnings growth (~39% YoY PAT), zero debt, and cash flow strength. ReutersReuters
Q4: What will move the stock next?
Observe Q2 revenue/margin, commentary on client demand (especially healthcare), and macro trends.
🔚 Final Thoughts
Persistent’s Q1 was solid on profit but below-par on growth and margins. The stock’s 7% dip reflects investor disappointment—but deeper analysis reveals strong fundamentals. If the company can deliver margin expansion and sustained deal momentum, the current price offers a potential buying opportunity. However, margin recovery and macro clarity should underpin any long-term call.
⚠️ Disclaimer
This blog is for informational purposes only. It does not constitute financial advice. Please consult a SEBI-registered advisor before investing.
