Persistent Systems Q1 FY26: Strong Revenue, Equity Gains

Persistent Systems kicked off FY26 on a high note with robust growth in both revenue and profit for the first quarter, reaffirming its position as a leader in the mid-cap IT segment. Backed by a strong deal pipeline, diversified sector presence, and a future-forward focus on AI and platform-driven services, the company reported its 21st consecutive quarter of sequential revenue growth.

Let’s explore in depth the performance metrics, business drivers, strategic shifts, and market outlook based on the Q1 FY26 results.

1. Quarterly Financial Highlights

Consolidated Financial Performance (YoY):

Standalone Financial Performance (YoY):

This impressive profit growth was supported by a rise in operational efficiency, sustained demand in core sectors, and greater project deliveries under its digital engineering and enterprise modernization verticals.

2. Margins and Profitability

The company maintained solid margins despite ongoing cost pressures and wage inflation.

• EBIT Margin: 15.5%

• PAT Margin: 12.7%

• EBITDA Margin: ~19.3%

The margin profile indicates effective cost controls, value-based pricing strategies, and the maturity of delivery capabilities across geographies.

3. Business Segment & Client Overview

Persistent Systems derives revenues from three key verticals:

1. Banking, Financial Services, and Insurance (BFSI)

   • Strongest growth segment with 30.7% YoY rise

   • Continued investments in AI-enabled financial automation

2. Software, Hi-Tech & ISVs

   • ~42% revenue share; 14% YoY growth

   • Recurring projects in product engineering, cloud, and DevOps

3. Healthcare & Life Sciences

   • Sequential improvement noted

   • Focus on AI-powered health data analytics and compliance tech

Client Metrics:

• 56 clients billed over $5 million annually

• Top 10 clients contributed ~42% to revenue

• Total client base growth aligns with TCV and ACV momentum

4. Deal Pipeline and TCV Growth

• Total Contract Value (TCV): $520.8 million

• Annual Contract Value (ACV): $385.3 million

• Strong pipeline visibility across North America, Europe, and APAC

• Emphasis on multi-year, platform-led engagements

The Q1 deal wins mark a consistent uptick in high-value contracts, particularly in digital transformation, AI implementation, and SaaS product development.

5. Strategic Focus: AI and Platforms

Persistent Systems continues to align its service offerings with next-gen technologies. Major strategic priorities for FY26 and beyond include:

• AI-Driven Digital Engineering: Enabling predictive and adaptive capabilities in client products

• Platforms and Accelerators: Building IPs and industry-specific reusable components to shorten time-to-market

• Modernization Services: Cloud, DevSecOps, and application reengineering for enterprises

• Partnerships with Hyperscalers: Deeper integrations with AWS, Azure, and Google Cloud for enterprise cloud solutions

6. Leadership & Organizational Updates

• Yogesh Patgaonkar, Chief People Officer, will retire on July 31, 2025

• Rajiv Naithani to assume the role of CPO from August 1, 2025

• Appointment of Shimona Chadha as Chief Marketing Officer, enhancing the brand’s global positioning

These leadership updates reflect Persistent’s push to scale its global footprint while maintaining a cohesive and innovation-led culture.

7. Share Price & Market Performance

On 24th July 2025:

• Opening Price: ₹5,465.00

• Intraday Trade: ₹5,148.50

• 52-week Range: ₹3,680 – ₹5,800

Despite strong earnings, the stock saw a minor correction, which experts attribute to:

• Valuation concerns (trading ~40x forward EPS)

• Temporary profit booking by institutional investors

• Slight margin pressure due to new hires and wage adjustments

8. Analyst Opinions & Valuation

• Motilal Oswal: Buy, Target ₹6,800

• Nuvama: Buy, Target ₹6,600, expects 24% EPS CAGR over FY25–FY28

• Nomura: Neutral, prefers Coforge

• Choice Equities: Suggests cautious optimism due to high P/E

Consensus remains positive on long-term potential but notes that execution consistency is critical at these valuation levels.

9. Long-Term Stock Performance

• 1-Year Return: +6.84%

• 5-Year Return: +1,234.96%

• Max Return Since Listing: +4,914.13%

Persistent has consistently outperformed peers in the midcap IT space due to its specialized focus on digital engineering, strong TCV wins, and proactive margin management.

10. Technical Analysis Snapshot

• PE Ratio: ~39.6 (TTM)

• EPS: ₹129.60 (TTM)

• Market Cap: ₹40,800 crore approx

• Free Float: ~66%

• Volume: High liquidity due to institutional interest

Support is seen near ₹4,980 and resistance at ₹5,550 based on technical charts.

11. Key Strengths

• Strong digital transformation credentials

• Consistent revenue growth for 21 quarters

• Sectoral diversification

• Strong TCV and recurring contracts

• High retention of top accounts

• Thought leadership in AI-led tech consulting

12. Key Risks

• Margin compression in the face of salary hikes

• High attrition in key delivery roles (~13.9%)

• Macroeconomic impact on US/Europe tech budgets

• Intense midcap IT competition

• Execution risks in complex digital transformation projects

13. Growth Outlook

The company aims to cross $2 billion in revenue by FY27, implying a 19–20% CAGR over the next two years. The growth strategy includes:

• Greater penetration in BFSI and Healthcare

• Strategic acquisitions in the US and Europe

• Enhanced platformization of services

• Expansion of GenAI and cybersecurity practices

• Deepening large-deal capabilities

Management guidance for Q2 FY26 projects:

• Revenue: 21% YoY growth

• PAT: 37% YoY growth

• Margins: Largely stable, ~15% EBIT

14. Company Background

• Founded: 1990, Pune

• Founder: Dr. Anand Deshpande

• CEO & MD: Sandeep Kalra

• Employee Count: Over 24,000

• Global Offices: 18 countries

Core service areas:

• Product engineering

• Cloud & DevOps

• AI/ML & data analytics

• IoT & security solutions

• Digital transformation consulting

Persistent’s customer base spans Fortune 500 companies in tech, finance, insurance, and healthcare.

15. Peer Comparison (Q1 FY26)

Persistent leads in revenue growth rate and maintains solid profitability despite a smaller topline than Tier-1 players.

16. Final Verdict: Should You Invest?

Yes, if seeking:

• Long-term compounders in digital transformation

• Consistent growth with sector diversification

• Strong leadership and operational excellence

Be cautious, if:

• You expect near-term re-rating without broader IT tailwinds

• You’re concerned about high valuations and short-term volatility

Persistent Systems Q1 FY26 results continue to validate its status as a dependable mid-cap IT bellwether. While the valuations demand sustained performance, its AI-enabled services, strong deal pipeline, and clear strategic vision provide a solid base for future growth.

ALSO READ: Infosys Q1 FY26 Results: PAT at ₹6,921 Cr, Revenue Up 7.54%