Persistent Systems Hits Record High on Stellar Q2 Results

Nifty IT index surges on strong Q2 results

Amid muted global cues, the Nifty IT index emerged as the top sectoral performer on Wednesday, rising over 3%. The Nifty itself gained 0.46%, or 111.5 points, reaching 24,583.6 after briefly crossing 24,600 earlier in the session. All 10 stocks in the Nifty IT index traded in the green, with Persistent Systems and Coforge leading the gains, rising 10-11%.

Persistent Systems hit a new all-time high of Rs 5,766.3, buoyed by better-than-expected Q2 results. CEO Sandeep Kalra highlighted the company’s 18th consecutive quarter of revenue growth, reporting $345.5 million in revenue, up 18.4% year-over-year, and a PAT increase of 23.4% in rupee terms. Coforge also impressed with a 52% quarter-on-quarter rise in consolidated PAT, reaching Rs 202.2 crore.

Other IT stocks like Mphasis, LTIMindtree, Tech Mahindra, TCS, and HCL Tech also gained between 2-5%. Atul Parakh, CEO of Bigul, attributed the IT sector’s rally to increased institutional confidence, particularly with FIIs raising stakes in 8 out of the 10 top IT companies during Q2. Notable FII increases included Infosys (+54 bps), TCS (+31 bps), Tech Mahindra (+40 bps), and HCL Tech (+22 bps). Despite mixed quarterly results, institutional investors are positioning for potential US interest rate cuts, while retail investors have reduced positions, reflecting differing long-term outlooks on the sector.

Persistent Systems’ share price surged nearly 12% to reach record highs following strong Q2 results. The company’s consolidated net profit rose 23.44% year-on-year, reaching ₹324.9 crore, up from ₹263.2 crore in the same period last year. Revenue from operations also increased by 20.13%, rising to ₹2,897.1 crore compared to ₹2,411.6 crore in the September FY24 quarter.

The stock opened at ₹5,259.55 per share, with an intraday high of ₹5,764 and a low of ₹5,200. Rajesh Bhosale, Equity Technical and Derivative Analyst at Angel One, noted the stock’s strong momentum, gaining over 10%, and re-entering uncharted territory. He advised traders to adopt a buy-on-dip approach, with ₹5,600 as key support and ₹6,100 as resistance. Ruchit Jain, Lead Research Analyst at 5paisa, emphasized that the rise in share price is supported by strong trading volumes, suggesting the uptrend will continue.

ICICI Securities praised Persistent Systems for its strong quarterly performance in revenue, transaction total contract value (TCV), and margins. The brokerage highlighted one-time gains in FY25, driven by reduced sales and marketing investments, improved pricing strategies, and a higher revenue share from platform-based services. They believe these factors will help alleviate concerns about margin growth in FY26.

ICICI Securities upgraded Persistent Systems to a ‘BUY’ rating, with a target price of ₹6,140, expecting a potential upside of around 19%. Despite a recent stock price correction, the brokerage continues to favor the company for its ability to maintain industry-leading growth. Additionally, they trimmed FY25E/26E EPS projections slightly due to lower other income but maintained a target price of ₹6,350, reaffirming their ‘BUY’ recommendation.