Persistent Systems shares soared nearly 12% to reach record highs following the announcement of its strong Q2 results. The company reported a 23.44% rise in consolidated net profit, reaching ₹324.9 crore in the quarter ending September 2024, up from ₹263.2 crore during the same period last year.
Revenue from operations also saw an impressive increase of 20.13%, touching ₹2,897.1 crore, compared to ₹2,411.6 crore in the corresponding quarter of FY24. These results are seen as a significant driver for continued share market investment in the company.
Persistent Systems' share price opened at ₹5,259.55 on the day of the earnings announcement, reaching an intraday high of ₹5,764. Analysts have noted the stock is riding a wave of strong momentum, making it a preferred option for share market investment. "Persistent Systems shares have re-entered uncharted territory, gaining more than 10%, and we expect this upmove to continue," analysts remarked. They also suggested a "buy on dip" approach, identifying ₹5,600 as key support and ₹6,100 as resistance. Investors interested in share market investment should consider riding this trend as the company's stock continues to show strength.
The robust financial performance in Q2 has added fuel to the stock's growth. According to analysts, "Persistent Systems had a successful quarter across all key metrics: revenue, transaction TCV, and margins." They also highlighted that FY25 one-time gains were supported by "a slower rate of sales and marketing investments, pricing strategies, and a larger share of revenue from platform-based services." This allows Persistent Systems to address concerns over expanding margins in FY26, making it an attractive option for share market investment.
Brokerages have expressed confidence in the company's future, upgrading Persistent Systems from an "Add" to a "Buy" rating. "We continue to value the stock at 51x on Q2FY26E to Q1FY27E EPS of ₹121, setting a target price of ₹6,140 with a potential upside of approximately 19%," they stated. The stock correction is seen as an opportunity for investors, and its industry-leading growth amid a challenging demand environment makes it a preferred choice for share market investment.
The company's core margins showed a significant recovery in Q2 compared to Q1, with analysts saying, "Persistent delivered another quarter of solid growth, with core margins recovering sharply from earlier levels."
While some remain cautious about margin concerns, many believe these concerns are overstated, seeing the company's long-term growth prospects as promising for continued share market investment. "We are trimming FY25E/26E EPS by -2.5%/-3.2%, mainly due to lower other income, while EBIT remains largely intact," analysts noted, maintaining a positive stance.
Brokerages continue to place a high valuation on Persistent Systems. One firm stated, "We maintain our target price at ₹6,350 (previously ₹6,500), keeping the 'Buy' recommendation intact." This projection reflects optimism about the company's ability to navigate challenging market conditions while continuing to deliver strong results, further supporting the case for ongoing share market investment in Persistent Systems.
Persistent Systems' stellar Q2 performance and its ability to maintain strong growth despite market challenges, make it an attractive stock for those considering share market investment. With analysts upgrading their ratings and maintaining positive price targets, the company's trajectory looks favourable for both short-term and long-term investors.
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