Shares of Persistent Systems Ltd are in news as the IT firm’s scrip will turn ex-dividend today. The company announced an interim dividend of Rs 32 while announcing its earnings for December 2023 quarter. The record date to determine the eligible shareholders for the dividend payout is set as January 30.
Persistent Systems shares ended 3.05% percent higher at Rs 8639.30 on Monday against the previous close of Rs 8,383.55 on BSE. Market cap of the firm rose to Rs 66,457 crore on BSE.
The stock opened higher at Rs 8493.75. It has climbed 18% this year and risen 88.71% in the last one year. It delivered multibagger returns of 101.55% and 466% in two years and three years, respectively. Total 0.14 lakh shares of the firm changed hands amounting to a turnover of Rs 12.06 crore on BSE.
The stock has a beta of 0.1, indicating low volatility in a year.
In terms of technicals, the relative strength index (RSI) of Persistent Systems stock stands at 82.9, signaling it's trading in the overbought zone. Persistent Systems stock is trading higher than the 5 day, 20 day, 50 day, 100 day and 200 day moving averages.
Motilal Oswal has assigned a target of Rs 8,110 to the IT sector stock. The IT firm has maintained its growth momentum with sharp execution on margins during the quarter, even as its peers have struggled to deliver positive growth and outlook.
“The deal TCVs were strong in 3Q and Persistent Systems is building a strong foundation for growth in FY25/FY26. The company’s strong performance in recent years, healthy order book, and strong deal pipeline indicate an encouraging demand trend. The stock is currently trading at 36 times FY26E EPS. Our target of Rs 8,110 is based on 37 times FY26E EPS. We reiterate our Neutral rating as we believe the positives have already been captured and the stock offers limited upside from its current levels," it said.
Arihant Capital Markets has given a target price of Rs 8,785 per share.
Persistent Systems delivered robust financial results in Q3FY24, driven by impressive performance across its diverse segments. The company reiterated its EBIT margin improvement guidance of 200-300 bps in the next 2-3 years.
A focus on improving the onsite against offshore mix, decrease in SG&A would aid in margin improvement, Arihant said.
"Due to the strong Q3 performance and emerging green shoots in demand and signs of pent-up demand in specific verticals, our growth estimates for FY23-FY26E stands at 15.8 per cent CAGR in dollar terms and margin at 14.4 per cent/16.5 per cent/16.8 per cent for FY24E/FY25E/FY26E. We value the Persistent Systems at a PE of 40 times to its FY26E EPS of Rs 219.60, which yields a target price of Rs 8,785 per share. We upgrade our rating to Hold from Reduce earlier," Arihant said.
Nuvama suggested a target of Rs 9,050 on the stock.
The brokerage remains positive on Persistent Systems and expects it to outperform peers, given its strong positioning in the digital transformational space, significant margin levers, and the sweet spot that it is in ($1 billion revenue range). Valuation at 35 times FY26E PE might appear expensive, but is justified in our opinion given the company’s strong growth profile, it said
The firm announced its December quarter earnings on January 20.
Consolidated profit in Q3 rose 20.3% year-on-year and 9% sequentially to Rs 286 crore. Revenue from operations climbed 15% year-on-year and about 4% sequentially to Rs 2,498 crore.
The company’s board approved splitting the value of shares in the ratio of 2 for 1. This was the first time the company divided its shares since it got listed.
The existing one equity share having a face value of Rs 10 each, will be split into two equity shares having a face value of Rs 5 each, the company said in an exchange filing.
Persistent Systems Limited is engaged in the business of providing software products and technology services. The company’s segments include banking, financial services, and insurance (BFSI), Healthcare & Life Sciences, and Technology Companies and Emerging Verticals.
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