Persistent Systems shares came under pressure in early trade on Wednesday, even as analysts and brokerages largely maintained a constructive view on the company’s medium- to long-term prospects following a strong
December quarter (Q3FY26) performance.
The
Persistent Systems stock fell as much as 4.62 per cent to an intraday low of ₹6,050 per share. Around 10:30 am, shares of the IT services firm were trading 3.55 per cent lower at ₹6,118.30. In comparison, the benchmark BSE Sensex was down 0.38 per cent at 81,869.11 levels.
Market participants attributed the decline largely to profit booking after a sharp rally over the past few months rather than any deterioration in fundamentals.
Profit booking after sharp run-up
Ravi Singh, chief research officer at Master Capital Services, said the stock witnessed selling pressure as investors locked in gains after a strong run. “Persistent Systems has gained over 36 per cent in the last three months. The decline seen today appears to be normal profit booking at higher levels and should not be mistaken for a market breakdown or crash,” he said.
Singh added that the company’s fundamentals remain intact, supported by a healthy operational performance in the December quarter. Persistent reported a
17.3 per cent year-on-year (Y-o-Y) growth in consolidated revenue and a 4 per cent quarter-on-quarter (Q-o-Q) increase, taking Q3FY26 revenue to $422.5 million. In constant currency (CC) terms, revenue growth also stood at 17.3 per cent Y-o-Y and 4.1 per cent sequentially, indicating steady business momentum.
From a technical perspective, Singh said the stock continues to trade in a positive structure. The ₹6,000 level remains a key support zone, having earlier acted as a strong demand area. On the upside, ₹6,500 is seen as an important resistance, and a decisive breakout above this level could open the door for a move towards ₹7,250-7,500 in the coming sessions.
Similarly, Kranthi Bathini, director of equity strategy at WealthMills Securities, said Persistent delivered a “decent set of numbers” for the quarter. However, weakness in the broader markets has led to some profit booking at higher levels. “The stock is in a consolidation range now. Long-term investors can consider buying on dips,” he said.
ALSO READ | DCM Shriram slips 3% on posting decline in Q3 profit YoY; check details Q3 performance and deal momentum
Persistent Systems’ December quarter performance was marked by steady revenue growth and a sharp improvement in margins, aided by its increasing focus on AI-led platforms, tools, and outcome-based pricing models.
Brokerage Nomura said the company’s Q3 FY26 revenue came in at $423 million, translating into 4.1 per cent quarter-on-quarter growth in constant currency terms, broadly in line with expectations. Adjusted Ebit margin stood at 16.7 per cent, beating estimates by a wide margin and expanding 120 basis points (bps) sequentially, despite one-off costs related to provisions under the new labour code in India amounting to ₹86.9 crore.
Reported earnings per share rose 16 per cent Y-o-Y to ₹28.2. Growth was broad-based across verticals, with BFSI and healthcare leading the performance, growing 4.6 per cent and 4.8 per cent quarter-on-quarter, respectively, in dollar terms.
Nomura also highlighted strong deal wins, with total contract value (TCV) and annual contract value (ACV) rising about 14 per cent and 17 per cent Y-o-Y, respectively, during the quarter. The book-to-bill ratio improved to 1.6x from 1.5x in the previous quarter, indicating sustained demand momentum.
ALSO READ | Muthoot Finance zooms 50% in 5 months; why gold financier hit new high? Brokerages divided on valuation comfort
While most brokerages acknowledged the strength of Persistent’s execution and growth visibility, views differed on valuation comfort at current levels.
Nomura retained a ‘Neutral’ rating, citing rich valuations, even as it raised FY27-28 earnings estimates by around 2 per cent and increased its target price to ₹6,100. The brokerage noted that the stock is trading at about 41.5x FY27 earnings and said it prefers Coforge within the mid-cap IT services space.
Motilal Oswal, however, reiterated its ‘Buy’ rating, describing the quarter as “business as usual” for Persistent. The brokerage flagged the margin beat as a surprise but said it awaits clarity on the sustainability of these levels. It values the stock at 45x FY28 earnings and has set a target price of ₹8,500, citing consistent execution and strong growth visibility.
JM Financial also maintained a ‘Buy’ rating, stating that Persistent delivered yet another strong quarter with healthy deal wins and a meaningful margin beat. It said the company’s early investments in AI-led platforms such as SASVA and iAURA, along with its product engineering and data capabilities, provide a competitive edge and justify premium valuations.
PL Capital and Emkay Global echoed similar optimism, pointing to strong growth visibility, improving margins, and healthy deal momentum. While PL Capital set a target price of ₹7,360, Emkay retained an ‘Add’ rating with a target of ₹6,700, reflecting differing views on valuation multiples.
That said, while near-term stock movement may remain volatile amid broader market weakness and profit booking, analysts believe Persistent Systems’ strong execution, AI-led offerings, and robust deal pipeline continue to underpin its medium-term growth story.
Disclaimer: The views and investment tips expressed by the brokerages in this article are their own and not those of the website or its management. Business Standard advises users to check with certified experts before taking any investment decisions.
 "Persistent Systems slips 5% on profit booking despite strong Q3 show")
